The USD/JPY saw a surge following a speech from Bank of Japan Deputy Governor Shinichi Uchida emphasizing the importance of maintaining an easy monetary policy and indicating that the BOJ is unlikely to aggressively raise interest rates, even after discontinuing its negative interest rate policy. Meanwhile, China’s January inflation data revealed a decline in CPI, but core inflation increased. The CPI rising only 0.2% y/y for 2023, remains well below the PBoC 3% target for 12 consecutive years. This further deflation has effectively raised real interest rates in China.
Despite China’s economic concerns, Chinese stocks continued to rise ahead of the Lunar New Year holiday, with the Chinese markets remaining closed on Friday, February 9, and set to reopen on Monday, February 19. On the other hand, Hong Kong and Singapore markets also experienced brief closures. The CSI 300 Index, tracking the performance of the top 300 stocks listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange, is considered a benchmark for the overall performance of the Chinese A-share market, including the largest and most liquid A-share stocks from various sectors like financials, industrials, consumer discretionary, technology, and healthcare.
The surge of USD/JPY came after Bank of Japan Deputy Governor reiterated the significance of maintaining an easy monetary policy and left the possibility of aggressively raising interest rate, after discontinuing the negative interest rate policy. China’s January inflation data reflected a decline in CPI, but a rise in core inflation, with the CPI remaining well below the PBoC 3% target for the past 12 years. Despite these economic concerns, Chinese stocks continued to ascend ahead of the Lunar New Year holiday, with the Chinese markets set to reopen on Monday, February 19 following a brief closure on Friday, February 9. The CSI 300 Index, which includes the largest and most liquid A-share stocks covering various sectors, is widely used as a benchmark for China’s stock market performance.