Japan’s prime minister, attempting to build support for painful fiscal reforms, said Saturday that the country should be alarmed by ratings cuts in Europe and must tackle its massive public debts to avoid becoming the next target.
Japan’s debt is more than twice its gross domestic product, higher than any of the struggling European economies whose fiscal problems have set off a eurozone crisis that has reverberated in markets around the world. Japan’s credit rating was downgraded last year, and Prime Minister Yoshihiko Noda said it could be further harmed if the country is seen as dragging its feet on reforms.
Noda commented during a live TV talk show following ratings agency Standard & Poor’s downgrade of nine European countries, including France, one of the strongest economies in the eurozone.
Read the rest of the story: PM says Japan must tackle debt to avoid rate cut.
Japan’s government signaled it is prepared for sustained intervention to ward off speculators from yen purchases after currency appreciation forced companies from Panasonic Corp. to Honda Motor Co. to lower earnings forecasts.
Finance Minister Jun Azumi said in Tokyo he will “continue to intervene until I am satisfied,” after yen sales yesterday that Credit Suisse Group AG analysts estimated may have exceeded $50 billion. The intervention was the first since August, when Japan spent 4.51 trillion yen $57 billion seeking to stem the currency’s surge to a postwar high against the dollar.
The effort showed support by Prime Minister Yoshihiko Noda for exporters seeing a loss in competitiveness after the yen rose 15 percent against the dollar and 21 percent versus the euro the past two years. With Nissan Motor Co. Chief Executive Officer Carlos Ghosn warning last month about a hollowing out of industry, lack of action risked undermining Noda’s agenda, said Hideo Kumano, an economist at Dai-Ichi Life Research Institute.
Read the rest of the story: Japan May Ready Sustained Yen Sales as Noda Agenda at Risk.
When it comes to weakening the yen, currency speculators are the least of Japan’s problems.
That’s because when policymakers intervene to limit yen strength, as they did Monday, they square off against a formidable array of forces, including U.S. monetary policy, Chinese reserve managers and global investors from Texas to Tokyo united by one desire: to sell the U.S. dollar.
Investors and market analysts say that explains why prior efforts to weaken the yen against the dollar have failed and why the chances of success this time around are equally slim.
Read the rest of the story: Dollar’s Many Woes Complicate Japan Intervention.
Japan’s new finance minister, Jun Azumi, carried through on his threat to intervene in currency markets to reverse a strengthening of the yen that has hurt the country’s vital export sector.
The yen weakened sharply to 78.30 to the dollar Monday morning in Tokyo, retreating from a post-World War II record of 75.31 yen touched in early trading. Azumi confirmed that the Japanese government had sold yen for greenbacks, and would continue doing so until it was “satisfied,” according to Kyodo News.
The benchmark Nikkei 225 average rose through the 9,100 level for the first time since Aug. 16.
Read the rest of the story: Japan Intervenes To Pull Yen Back From Record Levels.
The Japan government decided to expand a lending program that will use government-held dollars to increase foreign acquisitions and investments in natural resources to about 10 trillion yen (about $130 billion), aiming to rein in the Japanese currency, the Nikkei business daily reported.
The expansion is part of a package of policy responses to the strong yen that the cabinet is set to approve on Friday, the newspaper said.
Earlier plans for the lending program run by the state-backed Japan Bank for International Cooperation had called for $100 billion, or roughly 7.7 trillion yen, in loans, the paper said.
The dollar funding will come from a special government account for foreign exchange interventions, the Nikkei said.
Read the rest of the story: Japan to Boost Dollar Loans to Curb Yen.
The Bank of Japan cut short its planned two-day meeting and went straight for the currency market’s jugular, sinking its teeth deep in to the artery and achieving the maximum blood-loss from its victims. The unilateral nature of its intervention was precisely what the authorities had hinted at the day before. Market participants were clearly distracted by the blood still flowing dangerously from other open wounds as growth stalls around the world adding to fears that the death-spiral facing investors is merely at the beginning.
Japanese yen – Considering the pretty well-flagged signs that the Bank of Japan would likely intervene after its August policy meeting, the impact was still significant. A 4% slump in the yen was the largest since intervention in October 2008 and achieved more today than when G7 central bankers joined forces on March 17 in the wake of the Japanese earthquake and tsunami. And while the impressive result is a dollar rally back above ¥80.00 I’m still left wondering whether the yen’s restraint can be maintained.
Read the rest of the story: Bank Of Japan’s Yen Intervention Leaves Trail Of Blood And Gore – Great Speculations – Buys, holds, and hopes.
Japan warned Friday that it would consider intervention in the foreign currency market as a means to protect its disaster-hit economy, which is being held back by the strong yen.
The yen hit a four-month high of 77.50 against the dollar in Asia on Friday, as traders sought safer investments over concern that the United States was close to defaulting on its debt obligations.
The surge in the yen led Finance Minister Yoshihiko Noda to suggest that the currency’s strength gave a misleading picture of the Japanese economy.
Read the rest of the story: As yen rises, Japan warns of possible currency intervention.