Britain's vote to leave the European Union has ramped up the urgency for some Asian central banks to ease monetary policy, as a prolonged period of uncertainty threatens a wider downshift in trade and investment.
Economists warn delayed investment decisions and a hit to jobs and consumption from Brexit will hurt exports from Asia's trade-reliant economies, which are already reeling from weak external demand, particularly from China.
A round of Asian central bank policy meetings in the region this month could reveal an increased bias to ease policy, if not deliver outright interest rate cuts.
"The uncertainty of the EU and UK relationship is likely to put a dampener on Asia's exports to that region, perhaps extending Asia's trade recession," said Khoon Goh, head of research in Asia at ANZ in Singapore.
HSBC sees increased prospects of easing in Australia, New Zealand, South Korea, Japan, China and Thailand although the risks of inflation from currency weakness could constrain policy options in emerging markets like India, Indonesia and Malaysia.
"Not everyone has the same room for maneuver," said Hong Kong-based Frederic Neumann, co-head of Asian Economics research at HSBC.
"Luckily, the BoJ is not likely to sit idly by: expect officials to try to lean against an overly rapid climb of the yen. Direct FX intervention is certainly one possibility, but additional monetary easing will need to be part of the mix," HSBC's Neumann said.
In the currency market, the euro EUR= firmed to $1.1149, maintaining its recovery from 3 1/2-month low of $1.0912 hit in the wake of the UK referendum.
Global oil prices eased on Monday after comments by Saudi Energy Minister Khaled Al-Faleh that the market was heading toward balance were tempered by slowing demand in Asia, pockets of gasoline oversupply and signs crude output could rise.
Brent crude futures settled down 25 cents to $50.10 per barrel. U.S. crude futures were trading down 23 cents at $48.76 per barrel.
Thai
Eng