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Indonesia Unexpectedly Raises Rates

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http://www.nytimes.com/2013/09/13/business/global/indonesia-unexpectedly-raises-rates.html?ref=business&_r=0

JAKARTA — Indonesia raised interest rates in a surprise move on Thursday, signaling growing alarm over its currency, which is Asia’s worst-performing this year. But other central banks in the region held steady in advance of the U.S. Federal Reserve meeting next week.

The Indonesian central bank’s increase in three benchmark rates came on the same day that central banks in New Zealand, the Philippines and South Korea decided that their economies were robust enough to withstand the expected start by the Fed in reduction of its bond-buying program.

There has been a flight of money from emerging markets for the past few months because investors have anticipated higher yields from U.S. Treasury securities, leaving exposed economies, like Indonesia and India, dependent on capital inflows to cover large current-account deficits.

A panic move?

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Indonesia, Brazil, India, Turkey... keep 'em coming.

Japan is still the Big Prize.

  • September 8, 2013, 9:56 p.m. ET

Foreign Investors Sold Japan Stocks In August As Econ Reforms Slowed

TOKYO--Foreign investors sold Japanese stocks in August as Japan's efforts to turn its economy around appear to have slowed in the summer. Foreign investors on balance sold Y193.3 billion ($1.93 billion) of Japanese stocks, the first net selling after 10 consecutive months of net purchases, data from the Ministry of Finance showed Monday.

The shift came as investors were disappointed at the slow pace of reforms promised by Prime Minister Shinzo Abe. His administration hasn't given the final go-ahead for a planned tax increase, which was seen as relatively easy because the public generally supports the hike and the necessary legislation has already been passed. There are also few signs the administration is aggressively undertaking agricultural and medical reforms, which will likely be more contentious.

"If the government can't even decide on the sale tax, which has already been legislated, doubts will certainly grow about how they can implement painful structural reforms," said Hiromichi Tamura, chief strategist for Japan at Nomura Securities.

Still, the selling may be small, compared with the large amount of funds that had poured into Japanese stocks since late last year. Overseas investors bought a total of Y13 trillion of Japanese stocks since October through July, according balance of payments data released separately Monday.

It is too early to say whether selling will continue or turn out to be a one-off, summer retreat, analysts say.

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