Crypto Legislation Stalls As Industry And Banks Clash Over Market Rules

Some Bank of Japan policymakers are considering an interest rate hike sooner than markets anticipate, with April emerging as a distinct possibility, according to sources familiar with the central bank's thinking. The primary driver for this accelerated timeline is a weakening yen, which threatens to amplify already persistent inflationary pressures.

While the BOJ is expected to hold rates steady at its upcoming January 23 meeting, internal discussions suggest a growing case for further monetary tightening. This comes just after the central bank raised borrowing costs to a 30-year high of 0.75% in December.

Market Expectations vs. Internal Debate

Current market consensus, reflected in a Reuters poll, points to the next rate hike occurring in July, with rates potentially reaching 1% or higher by September. However, some BOJ officials believe that if there is sufficient evidence of Japan sustainably hitting its 2% inflation target, action could be warranted earlier.

The debate highlights the challenge facing the central bank: normalizing its ultra-low interest rate policy amid rising global economic headwinds and an economy still recovering from deflation.

Governor Kazuo Ueda has advocated for a cautious approach, emphasizing the need to monitor the impact of past rate hikes on Japan’s fragile economy. However, a more hawkish sentiment is gaining ground among other board members.

At the December meeting, opinions included calls for:

• Steady rate hikes to avoid falling behind the inflation curve.

• A rate increase once every few months.

• Timely hikes to prevent excessive yen depreciation.

Hawkish members Naoki Tamura and Hajime Takata have already voiced dissent against the bank's view that inflation will not durably hit 2% until October or later.

Why a Weak Yen Changes the Game

The BOJ’s baseline projection assumes that food-driven inflation will cool, allowing for more sustainable wage-driven price growth. However, the yen's sharp decline since October complicates this outlook.

A weaker currency directly increases the cost of importing fuel, food, and raw materials. With Japanese companies already showing a willingness to pass on higher costs to consumers, a persistently weak yen provides another reason for price increases, a risk drawing significant attention within the BOJ.

Since Sanae Takaichi became prime minister in October, the yen has fallen approximately 8% against the dollar, briefly touching an 18-month low of 159.45. This has kept Japan’s real interest rates deeply negative and drawn criticism for fueling the currency’s slide.

All Eyes on the April Meeting

The BOJ's policy meeting on April 27-28 is shaping up to be a critical event. Several key data points and reports will be available by then, providing a clearer picture of the economic landscape.

Key factors that make the April meeting pivotal include:

• Annual Wage Negotiations: The results of major firms' wage talks with unions will be clear, offering insight into future wage growth.

• Quarterly Business Survey: The BOJ's "Tankan" survey, due April 1, will reveal how previous rate hikes have influenced business spending plans.

• Long-Term Forecasts: The board will release its first-ever growth and inflation projections extending through fiscal 2028, requiring a deeper analysis of its long-term policy path.

In its upcoming meeting, the BOJ is also expected to revise its economic growth and inflation forecasts for fiscal 2026 upwards from the current projections of 0.7% growth and 1.8% core inflation. For months, Japan's core consumer inflation has remained above the BOJ's 2% target, hitting 3.0% in November, driven largely by high food prices.

Singapore's non-oil domestic exports rose by 6.1% in December from a year earlier, government data showed on Friday, led primarily by non-monetary gold and supported by electronic products such as integrated circuits and disk media products.

The export growth compared with a Reuters poll forecast of a 10% increase and followed a revised rise of 11.5% in November.

Among key markets, exports to China and Taiwan rose, while shipments to Japan and United States were lower than a year earlier, Enterprise Singapore said.

For the full-year 2025, non-oil domestic exports grew 4.8%, beating Enterprise Singapore's November forecast of around 2.5%, as it expected robust AI-related demand and high gold prices to provide some support to shipments in the fourth quarter.

In December, the Trade Ministry said annual economic growth for 2025 came in at 4.8%, well ahead of its November forecast of around 4.0% and a previous range of 1.5% to 2.5%.

Source: Theedgemarkets

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Soaring prices for silver are putting an extra squeeze on solar panel makers as they look to end more than two years of losses amid brutal competition in the sector.

Spot silver prices surged to a record above $93 an ounce this week, more than tripling over the past year. That means the trace amount of the metal used in solar cells now accounts for 29% of the total cost of a panel, up from just 3.4% in 2023 and 14% last year, according to BloombergNEF.

Panel makers are responding by raising prices and accelerating their plans to substitute silver with cheaper materials like copper. The added costs are coming as losses continue to mount throughout the industry, which is suffering from massive overcapacity after a frenzied factory buildout in the early part of the decade.

"Soaring commodity prices impose irresistible cost pressure on solar manufacturers," said BNEF analyst Yali Jiang. "This may drive up solar module prices, as manufacturers have little room to absorb additional costs after enduring two years of depressed market prices."

In the world's biggest market, Chinese module makers hiked prices to more than 0.8 yuan per watt this week, an increase of between 1.4% and 3.8% from last week, to reflect increased silver costs, according to InfoLink Consulting. That would put the price of a typical 500-watt panel at about 400 yuan ($57).

Several major solar companies, including Trina Solar Co. and Jinko Solar Co., warned this week they expect to post another year of net losses in 2025. The guidance suggests the sector's downturn has yet to bottom out, despite a year of industry self-discipline measures and a government-led campaign to curb excess capacity and halt price wars.

The white metal traded near $90 an ounce on Friday, and has gained for nine straight months — the longest streak in records going back to 1950.

Silver in paste form is a key material in solar panels, used to make electrical contacts to carry power generated by cells. Manufacturers have constantly sought to reduce the amount of the material as part of broader efforts to reduce costs, averaging 8.96 milligrams per watt in 2025, compared to 11.2 grams in 2024, according to BNEF.

Those efforts are now accelerating. Longi Green Energy Technology Co. last week announced it will soon begin substituting base metals for silver in its cells, joining others including Jinko Solar and Shanghai Aiko Solar Energy Co. in making the switch.

There are a number of methods engineers can use to substitute cheaper copper for some or all of the silver in cells, but going too far too fast can be risky for manufacturers. Customers usually require warranties for 20 years or longer, and increasing substitution raises the risk of a shorter lifespan because there's been less time to test the new material.

"If panels fail after a decade but the warranty is twenty years, the manufacturer could face huge liabilities that could lead to bankruptcy," said Gregor Gregersen, founder of Silver Bullion Group, a precious metals dealer.

Still, even limited substitution efforts, along with an expected slowdown in global panel installations, means the sector will likely reduce silver use by about 17% this year, from annual demand of about 6,000 tons in 2025, Shanghai Metals Market said in a research note this week.

The solar sector accounted for about 17% of total silver demand last year, more than double its share from a decade ago and on par with what's used to make jewelry, according to data from the Silver Institute. A substantial slowdown in consumption could threaten the long-term continuity of the white metal's blistering rally, much of which has been driven by increased speculative interest and a broader rotation into commodities.

"At silver's price levels today, a lot more substitution can happen," said Nikos Kavalis, managing director at consultancy Metals Focus. "I don't think this will affect price in the near term, given how strong investment demand remains, but it does mean less silver will be consumed by the industry going forward."

Source: Bloomberg Europe

Chinese banks processed a record volume of foreign currency sales for their clients in December, as expectations for a stronger yuan and seasonal demand converged to drive a massive shift into the local currency.

Data from the State Administration of Foreign Exchange released Thursday shows that onshore lenders sold a net $99.9 billion in foreign exchange on behalf of clients. This figure is more than six times the amount recorded in the previous month, reflecting a broad-based move by both corporations and investors to position for gains in the yuan.

What's Driving the Yuan's Strength?

The yuan has been the best-performing currency in Asia over the past month, strengthening by over 1% against the U.S. dollar and breaking below the key psychological level of 7 per dollar. The rally is underpinned by several key factors:

• Broad Dollar Weakness: A general decline in the U.S. dollar has provided a significant tailwind for the yuan.

• Swelling Trade Surplus: China's robust trade performance continues to generate strong foreign currency inflows.

• Economic Optimism: Positive sentiment around China's economic growth has supported advances in the country's onshore stock markets.

• Seasonal Demand: December typically sees a spike in currency settlement activities, as exporters convert foreign earnings into yuan to meet year-end operational needs.

A Shift in Market Expectations

Analysts see the data as clear evidence of a change in market sentiment. According to Xiaojia Zhi, an economist at Credit Agricole CIB, the figures point to "a notable shift in market expectation around the yuan toward appreciation." Zhi attributed this change to "weaker dollar expectations and more positive sentiment around China equities," noting a rotation out of U.S. tech stocks and into Chinese ones.

This market-driven appreciation appears to have the tacit approval of policymakers. The People's Bank of China has been setting the yuan's daily reference rate at progressively stronger levels, signaling its tolerance for a managed rise in the currency's value. Thursday's fixing was the strongest since May 2023.

Wall Street Revises Yuan Forecasts

As the yuan continues to climb, major global banks are upgrading their forecasts.

Morgan Stanley recently revised its first-quarter prediction for the yuan to 6.85 per dollar, a significant strengthening from its previous forecast of 7.05. Similarly, Australia & New Zealand Banking Group now expects the currency to reach 6.85 by the end of the year, while Macquarie Group anticipates a level of 6.8.

Future Catalyst: A Stockpile of Unsettled Dollars

Another potential driver for the yuan lies in the vast holdings of foreign currency held by Chinese companies. Zhongtai Securities estimates that exporters have accumulated approximately $930 billion in unsettled foreign exchange since 2022.

If these firms decide to convert a portion of this stockpile into yuan, it could create another powerful wave of support for the currency. "We expect firms to turn more willing to sell foreign exchange in 2026, which will form a positive conjunction with yuan appreciation," analyst Zhang Deli noted.

Figure 1: The oil tanker Nave Photon, carrying crude from Venezuela, is pictured docked at Port Freeport in Texas on January 15, 2026.

US Begins Selling Venezuelan Crude at a Premium

The United States is now selling Venezuelan crude oil at prices approximately 30% higher than the previous government achieved, Energy Secretary Chris Wright announced Thursday. This development follows an operation by U.S. special forces that captured former Venezuelan President Nicolas Maduro earlier this month.

Washington has already completed its first sale of Venezuelan oil, valued at around $500 million, a U.S. Department of Energy spokesperson confirmed. More sales are anticipated in the near future.

"We're getting about a 30% higher realized price when we sell the same barrel of oil than they sold the same barrel of oil three weeks ago," Wright stated at a U.S. Energy Association event, without providing specific price points.

Trump Outlines Plan for Future Sales and Investment

The initial oil sales are just the beginning of a longer-term strategy. President Donald Trump said last week that Venezuela would transfer between 30 million and 50 million barrels of crude oil currently under U.S. sanctions. He confirmed the oil would be sold at market rates, with the proceeds controlled by him to benefit both nations.

According to the Department of Energy, these oil sales are set to continue "indefinitely."

Furthermore, Trump announced last Friday a plan for oil companies to invest at least $100 billion to rebuild Venezuela's struggling energy sector. He added that the U.S. would provide security to help ensure investors see strong returns.

Oil Majors Remain Cautious Despite White House Push

To discuss the investment plan, President Trump met at the White House with leaders from major energy firms, including Exxon, Chevron, ConocoPhillips, Halliburton, Valero, and Maratho.

However, the industry appears hesitant. Exxon CEO Darren Woods reportedly told Trump that the Venezuelan market is "uninvestable" in its current condition. This caution is rooted in history; Venezuela seized assets from Exxon and Conoco in 2007, and the companies are still owed billions of dollars from arbitration cases.

Market Impact and The Political Hurdle

These developments are unfolding as global oil markets contend with a supply surplus that has been putting pressure on prices. As of 8:33 p.m. ET, Brent futures were up a slight 0.14% to $63.85 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 0.2% to $59.31.

Venezuela possesses the world's largest proven crude reserves, estimated at 303 billion barrels. Yet, years of underinvestment have decimated its production, which has fallen from a peak of 3.5 million barrels per day (bpd) in the 1990s to around 800,000 bpd today.

Baron Lamarre, co-founder of Index and former head of trading at Petronas, argued that the core issue isn't technical but political.

"Venezuela's oil problem is not technical, and it is not commercial, it's fundamentally human and political," he said. "Until investors have confidence in long-term political continuity, capital will remain cautious, incremental, and conditional."