$100 Oil Prices, Weakened Yen: Asia's Economic Outlook

Oil prices briefly touched $100 a barrel, causing concern for investors in Asia. Mitul Kotecha, head of FX and EM Macro Strategy Asia at Barclays, explained that this price is more complicated than it seems.

The price increase is not just about the cost of crude oil, but also about spreads and refinery margins, which have risen dramatically alongside crude prices. Low global inventories are contributing to price volatility, making it difficult for investors to predict future prices.

Kotecha predicted that oil will average $96 a barrel for the year, despite the recent surge in prices. He attributed this prediction to the fact that refineries are struggling to keep up with demand due to low inventory levels.

The yen has also been affected by global economic developments, sliding past 163 per US dollar, its lowest level in four decades. Kotecha explained that low real yields and a widening interest rate differential with the US are making it difficult for Japan to defend its currency.