Asian Central Banking: Ben Bernanke, Take Notes...

Weakness in Asian currencies was one of the stealth leading indicators of their 2008 economic growth slowdown. This week that “Trend” has started to reverse itself. The Indian Rupee has recovered, predictably, since Singh surviving a political confidence vote. Meanwhile the Philippine Peso had its biggest one day move in the last 7 years overnight, trading +1.3% to back up to the 44 level.

Central bankers in Asia have been proactively hawkish, fighting the good fight on the inflation front. With commodities correcting this week, they’re getting rewarded for their travails. The head of the Philippines central bank came out with explicit comments overnight that he needs to raise rates further. His domestic stock market and currency liked that, and rallied. South Korea’s new President has recently done the same. Korean equities traded up another +2% overnight.

Ben Bernanke, I hope you’re taking notes.

KM