VINACHEM

Asian nations from South Korea to Singapore may refrain from monetary easing this week as risingoil prices add to inflation risks, even as pressure mounts on Japan to add stimulus and China grapples with slowing expansion.

Indonesia (IDBIRATE) will keep interest rates unchanged for a secondmonth tomorrow, and South Korea and Pakistan will follow a daylater, according to Bloomberg News surveys. Singapore, whichuses its exchange rate to manage inflation, is forecast byeconomists to maintain its policy stance on April 13, when thegovernment is predicted to report a rebound in growth.

Crude oil has risen 18 percent in the past six months,forcing Asian governments to raise fuel prices and limitingpolicy options for central banks in the world’s fastest growingregion. Developing Asia can refrain from further monetary andfiscal stimulus because expansion will remain robust, whilespikes in energy costs can revive the threat of inflation, theAsian Development Bank said in a report today.

“Economic momentum is steadily improving, so there is noscope for further monetary accommodation,” said Wai Ho Leong, asenior regional economist at Barclays Capital in Singapore.“The focus of policy is to anchor inflation expectations.”

The MSCI Asia Pacific Index (MXAP) has risen about 8 percent thisyear on signs the U.S. is recovering and as Europe’s turmoilabated with Greece’s second bailout package. The Bank of Japanyesterday resisted calls from lawmakers to expand monetaryeasing and counter deflation.

Concerns Revived

Still, the regional stock index fell this week as Spanishbonds trading closer to levels that prompted Greece, Ireland andPortugal to seek European bailouts revived concern that Europe’sdebt crisis will worsen.

The Bank of Japan kept its key rate between zero and 0.1percent and left its 30 trillion yen ($371 billion) asset-purchase fund and 35 trillion yen credit-lending programunchanged yesterday.

Takeshi Miyazaki, a Democratic Party of Japan lawmaker anda leader of the ruling party’s anti-deflation group, called onthe BOJ to do more later this month, saying yesterday thecentral bank should pursue “bold and large-scale monetaryeasing.”

Japan’s machinery orders exceeded all economists’ estimatesin February, signaling gains in capital spending that may helpto sustain a recovery in the world’s third-biggest economy, aCabinet Office report showed in Tokyo today. Bookings increased4.8 percent, the most since November.

Australian Loans

Elsewhere, Australian home-loan approvals fell for a secondmonth on the fastest exodus of first-home buyers in a decade, astatistics bureau report showed in Sydney today. A privatesurvey showed consumer confidence declined to an eight-month low.In neighboring New Zealand, business confidence rose in thefirst quarter while companies had three months of weak trading,a report by the New Zealand Institute of Economic Research Inc.showed.

In Europe, U.K. retail sales rose for the first time inthree months in March as warm weather boosted demand forclothing and outdoor gear, the British Retail Consortium said.Hungarian inflation probably slowed to 5.5 percent in March,according to the median estimate in a Bloomberg survey ahead ofa report due today. Russia is due to release weekly price data,and Norway and Spain will release industrial production data forFebruary.

A U.S. report on mortgage applications is due today fromthe Mortgage Bankers Association, a Washington-based trade group.The country’s import prices are estimated to rise 0.8 percent inMarch from the previous month, according to the median in aBloomberg survey. The Federal Reserve will release its BeigeBook survey.

Costlier Fuel

Oil has gained on concern tension with Iran will disruptglobal supplies. China, the world’s largest oil consumer afterthe U.S., increased gasoline and diesel prices for the secondtime in less than six weeks on March 20. Its inflationaccelerated more than forecast in March, signaling policy makersmay exercise caution in adding stimulus to boost growth. ThePhilippines, Taiwan and Vietnam have also raised fuel pricesthis year.

“There is no clear case for short-term policy responses,but if inflationary pressures build up again and capital inflowsresume, there may be a need to readjust monetary policy tomaintain price stability,” Changyong Rhee, ADB chief economist,said in a statement.

Indonesia’s central bank kept its benchmark rate unchangedat 5.75 percent last month after cutting borrowing costs inFebruary, as a government plan to raise fuel prices revivedinflation risk. Inflation accelerated in March for the firsttime in seven months.

Indonesian Bid

All 20 economists surveyed by Bloomberg News expectSoutheast Asia’s largest economy to hold its key rate tomorrow.

Lawmakers in March rejected the government’s bid for animmediate 33 percent increase in the price of subsidized fuel,instead giving it the power to raise prices only if theIndonesia Crude Price exceeds the budget assumption of $105 abarrel by an average 15 percent over a six-month period. Thesix-month average was 11 percent above the budget assumption asof March 31, according to Bloomberg calculations.

“Bank Indonesia has already signaled a shift in their biasat the last policy meeting and with inflation risks on thehorizon, there is a strong case for them to maintain the currentstance,” said Euben Paracuelles, a Singapore-based economist atNomura Holdings Inc. “Having moved ahead of the rest of theregion in the easing cycle, Southeast Asia is probably alreadydone cutting interest rate this year.”

Singapore Stance

Singapore’s central bank will hold the current rate of thelocal dollar’s advance and refrain from altering its tradingband, according to analysts at 19 of 21 financial companiessurveyed by Bloomberg News. Two said there is a chance thecentral bank will leave it unchanged or increase the band’sslope to levels prior to its last review in October.

The Singapore economy expanded an annualized 6.8 percentlast quarter from the previous three-month period, when itcontracted 2.5 percent, according to the median estimate of 12economists surveyed by Bloomberg News.

South Korea, which is holding parliamentary elections today,grew the least in two years in the last three months of 2011,and the economy will return to a recovery path this quarter,Finance Minister Bahk Jae Wan said April 4.

The Bank of Korea will keep the benchmark seven-dayrepurchase rate unchanged at 3.25 percent for a 10th month whenpolicy makers meet, according to all 13 economists surveyed byBloomberg News. The central bank aims to keep inflation at themidpoint of a range of between 2 percent and 4 percent over themedium term.

Vietnam Cuts

Pakistan’s central bank will keep the discount rate at 12percent for a third meeting, according to all 11 economistssurveyed by Bloomberg. The country faces inflation exceeding 10percent, the fastest in Asia after Vietnam. The price gains, thelingering impact of floods in 2010 and 2011 and an insurgencynear the Afghan border are crimping expansion in the $200billion economy.

Vietnam is one of the few countries in the region stilllowering interest rates. The Southeast Asian nation cut itsborrowing costs for the second time in less than a month thisweek as easing inflation gave policy makers scope to bolster aneconomy that’s growing at the slowest pace since 2009. Thereductions are effective today.