(Makes change to headline.)
March 27 (Reuters) – A growing list of governments in the Asia-Pacific region are scrambling to calm financial markets and shore up liquidity, as the U.S.-Israeli war with Iran drags on, worsening pressure on their currencies and stoking broader market volatility.
Here’s how different countries are responding:
SOUTH KOREA
South Korea plans to carry out a 5 trillion won ($3.32 billion) emergency bond buyback to add liquidity to the local bond market and cap rising yields after three-year treasury bond yields surged to the highest point since mid-2024.
It has also expanded fuel tax cuts and is drafting a supplementary budget of 25 trillion won which could include cash vouchers for consumers and financial support for companies. The finance ministry aims to send the budget to Parliament by the end of March.
JAPAN
The Japanese government is tapping 800 billion yen ($5 billion) in reserve funds to finance subsidies aimed at keeping gasoline prices at about 170 yen per litre on average. The measure would cost as much as 300 billion yen per month.
It is also considering intervening in crude oil futures as the Middle East crisis drives energy prices up sharply.
PHILIPPINES
The Philippines’ central bank on March 26 convened a surprise, off-schedule policy review, that it said was aimed at reassuring the market that it was assessing the situation.
While it kept its key policy rate steady at 4.25%, it signalled it was ready to act should inflation expectations slip.
AUSTRALIA
The Australian government has not yet made any major policy changes or proposals, apart from steps to ensure imports of petrol and diesel, which are running short due to panic buying.
Prime Minister Albanese is due to meet state premiers and chief ministers next week to hash out a plan to manage the fuel crisis, which the government expects will last for months.
It is not yet considering fuel rationing but may try other voluntary measures to reduce demand, including encouraging people to work from home.
The government will announce its 2026/27 Budget in May and is under pressure to cut spending even as some groups press for all sorts of energy relief policies, including cutting taxes on fuel and direct support to households and businesses. There is also talk of taxing any “excess” profits made by Australian gas companies as a way of raising much-needed revenue.
The country’s central bank is more concerned about inflation than economic growth and has already lifted interest rates twice this year to 4.10% and it could well hike again in May.
NEW ZEALAND
New Zealand has temporarily aligned fuel standards with Australia to increase import options and will provide temporary weekly support of NZ$50 ($29.30) from April for low-income families to offset increased costs.
The government also updated and publicized its National Fuel Plan, outlining four response phases for petrol, diesel, and jet fuel, with actions ranging from monitoring supply and encouraging voluntary fuel savings to prioritizing fuel for emergency services, freight, food supply chains and key industries in more severe scenarios.
(Reporting by Brenda Goh in Seoul, Makiko Yamazaki in Tokyo, Praveen Menon in Sydney and Lucy Craymer in Wellington; Editing by Sumeet Chatterjee and Thomas Derpinghaus)
