22nd February 2025

1) Japan's Forecast-Beating Growth

• Japan’s economy grew 2.8% in Q4 2024, beating forecasts and boosting the yen.
• Growth was driven by business investment and net exports, though falling imports raised concerns about domestic demand.?
• Private consumption edged up but remained weak due to inflation pressures.
• The Bank of Japan is likely to continue gradual rate hikes.?
• PM Shigeru Ishiba aims to counter inflation with stimulus measures, while Japan faces trade uncertainties due to potential US tariffs.?
• Despite weak annual growth, nominal GDP hit ￥600 trillion for the first time.?
• The yen remains under pressure, and Japan risks being overtaken by India as the fourth-largest economy.

2) Indian Companies Focusing More on FX Hedging

• Indian companies are increasingly focusing on hedging strategies as the rupee has dropped nearly 3% against the dollar in three months.?
• Mentions of “hedging” in earnings calls tripled year-over-year, with firms like Titan, Hindalco, and Chaman Lal Setia Exports discussing FX risk management.?
• Companies bought a record $48 billion in forward cover in December amid rupee volatility.?
• The Reserve Bank of India’s new governor may be allowing more natural currency fluctuations, while aggressive forex intervention has curbed speculative bets against the rupee.

3) Chocolate Prices to Rise Further

• Mondelez and Hershey warn of further chocolate price hikes due to soaring cocoa costs.?
• Mondelez CEO says consumers should expect prices to rise by 30-50%, while Hershey has already implemented double-digit increases.?
• Unlike other consumer goods, chocolate prices continue to climb as cocoa prices nearly tripling last year.?
• Despite the pressure, Mondelez expects demand to remain strong.

4) Concerned Brits are Saving Instead of Spending

• UK consumers are prioritising saving over spending due to concerns over weak economic growth and persistent inflation, despite falling interest rates.
• A historically high share of households see now as a good time to save, fearing “trouble ahead.”?
• While consumer confidence has slightly improved, spending remains weak, limiting economic growth.?
• Rising real wages have not translated into higher consumption, and many still struggle with the cost of living crisis.?
• The Bank of England’s recent rate cut has helped some, but overall confidence in the economy remains low.

Harry Mills | Director, Oku Markets

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