20/05/2026

BIZ & FINANCE WEDNESDAY | MAY 20, 2026

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Japan economy grows faster than expected in Q1

Indonesia to start bond market intervention to stabilise prices

JAKARTA: Indonesia Finance Minister Purbaya Yudhi Sadewa has ordered his ministry to spend 2 trillion rupiah (RM450 million) per day to intervene in the bond market starting this week in an effort to stabilise prices. He did not elaborate on the mechanism, nor the objective of the operation. Purbaya told reporters late on Monday after attending a meeting with President Prabowo Subianto that the stabilisation measure is intended to provide “positive sentiment” for the bond market and aid the falling rupiah. “We are entering the bond market in stages. So going forward, this week (prices) will be more stable,” he said. His ministry could use its excess cash to fund the interventions, Purbaya said, noting it currently has 420 trillion rupiah of cash reserves. Purbaya said on May 6 that he wanted to activate a so-called “Bond Stabilisation Fund”, though on May 11 he backtracked, saying other instruments would be used because such a fund could only be utilised in times of crisis. The rupiah hit another fresh record low of 17,720 a dollar yesterday as sentiment related to the impact of the Iran war compounded investor concerns about the Indonesian government’s big spending plans, the independence of its central bank and transparency in the capital market. – Reuters Stellantis to pitch MILAN: Stellantis’ CEO Antonio Filosa will outline a new long-term strategy to investors tomorrow with a focus on reviving crucial US sales, tightening the group’s sprawling portfolio, and leveraging tie-ups with Chinese firms. The presentation at the Fiat-to-Jeep owner’s capital markets day, in Auburn Hills, Michigan, is a crunch point for Filosa who was brought in last year to turn around the carmaker’s flagging fortunes after it lost ground in the US and Europe. The world’s No. 4 automaker by sales is expected to outline plans to focus funding on a smaller group of four core brands, Reuters reported, while looking to expand joint ventures with Chinese automakers to make use of capacity and trim costs. “They just need their North American business to function. That will give immediate value to their stock,” said Massimo Baggiani from London-based Stellantis investor Niche Asset Management, which has bought two tranches of shares since March. Filosa will also likely focus on partnerships with Chinese automakers after Stellantis this month announced it will expand its joint venture in Europe with Leapmotor and a deal with Dongfeng to produce vehicles in China. Filosa’s pitch to investors will have “a lot of China in it”, a source familiar with the matter told Reuters. US revival, Chinese tie-ups to investors

slump, Thieliant added. The Bank of Japan said it expected consumer prices to rise 2.8% in the current fiscal year, compared with the 1.9% previously forecast, due to the impact of the conflict. It lifted next year’s outlook to 2.3% from 2%. This could prompt it to raise interest rates as early as June. It also slashed its fiscal 2026 growth forecast to 0.5% from 1%, and for next year trimmed its projection to 0.7% from 0.8%. Taro Saito of the NLI Research Institute said that “disruptions in logistics will trigger production adjustments, while the deterioration of terms of trade due to soaring crude oil prices will put downward pressure on corporate profits and the real purchasing power of households”. Expectations of monetary tightening, along with concerns over Takaichi’s fiscal policy, have helped drive a sharp rise in Japanese government bond yields in recent days. Japan is also believed to have spent tens of billions of dollars in the market to boost the value of the yen, which has weakened in recent months due to the global uncertainty, as well as the gap between US and Japanese interest rates. – AFP

o GDP expands 0.5%, supported by growth in private consumption and corporate investment

TOKYO: growth surpassed expectations at the start of 2026, official data showed yesterday, but Prime Minister Sanae Takaichi is mulling an extra budget as concerns grow over inflation due to the Middle East war. Gross domestic product (GDP) in the world’s fourth-biggest economy expanded 0.5% in the first quarter, exceeding market forecasts of 0.4%. Growth in private consumption and corporate investment contributed to the expansion, according to Cabinet Office data. It follows growth of 0.2% – revised downwards from an earlier reading of 0.3% – in the last quarter of 2025. The data came as Takaichi plans to draft a supplementary budget in a bid to safeguard growth, as consumers face soaring prices of everything from energy to rice due to the Middle East conflict. “Given the continuing uncertainty Japanese economic

surrounding the situation in the Middle East, it is important to closely monitor the trend of prices and the impact on the economy,” the government’s top spokesman Minoru Kihara told reporters yesterday, adding that Takaichi had instructed the minister of finance to consider arrangements to minimise risk. Marcel Thieliant of Capital Economics warned the Middle East conflict was likely to impact data going forward. “Japan’s economy approached the Iran war with solid momentum but we think that GDP growth will grind to a halt this quarter and next,” he wrote in a note. Japan has been trying to stem rising oil prices with government subsidies, but the nation is likely to feel the full impact of soaring energy prices in months ahead, Thieliant said. The country depends on the Middle East for around 95% of its oil imports. Already consumer confidence has begun to

A man walking past a construction site in Tokyo yesterday. Japan’s prime minister plans to draft a supplementary budget in a bid to safeguard economic growth. – REUTERSPICA

India’s rupee hits all-time low on mounting external finance pressures MUMBAI: The Indian rupee fell to a lifetime low yesterday, weighed by intensifying external pressures, with the protracted Iran conflict driving a sustained surge in oil prices and pushing US Treasury yields higher. Economists expect India’s current account deficit to widen significantly in the current fiscal year. A potential hit to remittances from the Middle East and expectations of subdued portfolio flows on rising concerns over India’s growth outlook could add to external sector pressures. inflows that are sustainable,” HSBC said in a note. “The continued distribution of FX market pressure between currency weakness (which can lower the trade deficit over time) and FX reserve use should help.” High oil prices are already feeding through to India’s external and inflation dynamics. Prime Minister Narendra Modi’s recent calls to conserve fuel and foreign exchange highlight the scale of pressure on the economy.

The recent surge in US Treasury yields, driven by inflation concerns, is further complicating the outlook for the rupee. The US 10-year yield climbed to its highest level in a year, before easing yesterday, with investors increasingly pricing in the possibility of a Federal Reserve rate hike this year. This is likely to make it more challenging for India to attract the capital inflows needed to finance its current account deficit, according to analysts. – Reuters

The rupee dropped to 96.44 (RM3.98) per US dollar, slipping past the prior lifetime low of 96.3875 hit on Monday. The currency’s losses since the Iran war broke out in late February now total 6%. The combination of high crude prices, underpinned by the prolonged US-Iran impasse, and subdued capital inflows is widening India’s external imbalances and leaving the rupee vulnerable.

India’s balance of payments is set to widen to a deficit in the range of US$65 to US$70 billion (RM258 to RM278 billion) this year, economists estimate, marking a third straight year of deficits and underscoring persistent external sector pressures. India “faces a twofold challenge ... to lower the current account deficit and attract capital

The merchandise trade deficit widened to US$28.38 billion in April, driven largely by a surge in crude oil imports to a six-month high. At the same time, April wholesale inflation accelerated to its highest level in three-and-a half years, underscoring the pass-through of higher energy costs.