Feb 7 (Reuters) - Preview of Asian Markets for the Day Ahead:
Investors are awaiting a potential interest rate cut on Friday, marking the first in nearly five years. This aligns with a global trend among major central banks looking to ease policy and reduce borrowing costs.
Exceptions to this trend include the and, which has halted easing, and the , gradually increasing rates from near zero.
The Reserve Bank of India's impending decision coincides with mounting global concerns about the economic impact of U.S. President Donald Trump's tariff threats.
Recently, both the and Bank of Mexico announced interest rate cuts, with the Bank of England's decision to lower rates by 25 basis points meeting expectations, though two policymakers favored a 50 bps reduction. Banxico hinted at the possibility of further cuts in future meetings.
Amid renewed fears of U.S. economic growth, U.S. have dipped below 4.50%, drawing closer to 4.00% than 5.00% following a weak employment report.
Economists polled by Reuters anticipate a 25 basis point rate cut by the Reserve Bank of India to reach 6.25% under Governor Sanjay Malhotra's inaugural monetary policy review to stimulate sluggish growth.
Despite India’s current exemption from Trump's protectionist measures, policymakers remain vigilant due to the doubling of India's trade surplus with the U.S. over five years, reaching $45 billion. The depreciated rupee further complicates matters, potentially restraining the RBI if the dollar strengthens due to tariffs.
Trading at a record low under 87.00 per dollar, the faces challenges against the stronger dollar. The expected rate cut is already factored into the rupee's value, with focus shifting to the new governor's direction.
Friday's economic calendar for Asia features the release of foreign exchange reserves from various countries, inflation data from Taiwan, and crucial January trade numbers from Taiwan. Taiwan's trade deficit with the U.S. ballooned to $74 billion in the past year alone, nearly quadrupling in six years.
This week, Taiwan pledged support for companies intending to expand into the U.S., offering assistance in finding partners. Notably, chipmaker plans a $65 billion U.S. investment to establish factories in Arizona.
Wall Street displayed marginal movement on Thursday, offering limited guidance for Asian markets. Post-market trading witnessed a 5% drop in shares following a lukewarm response to the company's Q4 earnings report.
Key events shaping Asian markets on Friday:
- Reserve Bank of India rate decision - Taiwan trade figures for January - Chinese foreign exchange reserves