Japan moves to weaken the yen

Discussion in 'Whatever' started by ElvisFromHell, Aug 4, 2011.

  1. ElvisFromHell

    ElvisFromHell Comment King

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    Japan moves to weaken the yen
    My wallet thanks you.

    From the NYT.

    TOKYO — As global investors flee the dollar and euro for refuge in stronger currencies, those havens have started to send out a message: enough.

    Demand for currencies like the Japanese yen and Swiss franc, seen as relatively safe assets to hold in turbulent times, have surged in recent weeks, driving up their value as investors have dumped dollars and euros as a result of debt worries in the United States and Europe.

    Declaring the yen’s rise to be a threat to the economy, Japan’s Ministry of Finance moved on Thursday to reverse the trend, a day after the typically sedentary Swiss bank unexpectedly cut interest rates in an effort to weaken the franc.

    A strong currency might sound like a validation of investor confidence in the performance of an economy. But for trade-dependent Japan and Switzerland, a sudden jump in the value of their currencies can wreak havoc by making their exports uncompetitive.

    By intervening, though, Japan and Switzerland risk criticism that they are inciting what some market players call “currency wars,” where countries compete to devalue their currencies.

    Both countries also devalued their currencies last year. South Korea and Brazil intervened in foreign exchange markets earlier this year. And China has long purchased dollar- and yen-denominated assets in an effort to keep its renminbi weak enough to sustain its export economy.

    “In a dream world where the Ministry of Finance and Bank of Japan could dictate exchange rates, they certainly won’t mind to see the yen weaken to 85-90 yen against the dollar,” Takuji Okubo, chief economist in Tokyo for Société Générale, wrote in a note to clients. “However, with all the developed economies in the world suffering, trying to grow through a weaker currency is likely to encounter resistance.”

    But Japan right now sees itself having little choice.

    “The recent rise in the yen in currency markets has been one-sided and unbalanced,” Finance Minister Yoshiko Noda said on Thursday as he announced the start of the intervention. “If this trend were to continue, it would harm the Japanese economy, even as we do all we can to recover from our natural disasters.”

    On Thursday, Japanese authorities delivered a one-two punch. First, the Finance Ministry said it had begun selling yen and buying dollars. Then the Bank of Japan announced that it had further expanded its program to purchase government and corporate bonds, a form of monetary easing aimed at increasing liquidity and helping to dilute the value of the yen.

    The yen weakened steadily throughout the day, from 77.15 yen to the dollar to about 80 yen on Thursday evening in Tokyo. Earlier this week, the yen came close to a record high of near 76.25 yen to the dollar. At midday Thursday in New York, the yen was trading at 78.96 to the dollar.

    “We judged that rises in the yen have economic costs, including the risk of damaging corporate sentiment and encouraging companies to shift production overseas,” the governor of the Bank of Japan, Masaaki Shirakawa, said at a news conference.

    Japan, which had taken a laissez-faire approach to currency policy from about the middle of the last decade, has over the last year become more willing to intervene. Last Sept. 15, with concerns over the American economy mounting, it spent 2.1 trillion yen in its biggest one-day intervention ever.

    On March 18, a week after an earthquake, tsunami and subsequent nuclear crisis, the Group of 7 industrialized economies came to Japan’s aid by staging a joint intervention, coordinating efforts to sell the Japanese yen on global currency markets. Traders had attributed the yen’s surge to Japanese companies repatriating funds to finance recovery back home.

    But since then, the dollar has again slumped against the yen, falling 5 percent in the last month as investors wary of the debt impasse in the United States fled to other currencies. Even after lawmakers in Washington struck a deal on Tuesday to avert a default or downgrade of United States debt, fresh concerns over the economy again weighed on the dollar.
     
  2. Martoy Black

    Martoy Black Addicted

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    Japan moves to weaken the yen
    Thanks for sharing^^
     
  3. Biff

    Biff S7 Royalty

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    Japan moves to weaken the yen
    But what sucks is when I started collecting, the exchange rate was about 100 yen (sometimes up to 110) to the dollar. :roll:
     
  4. Lixx

    Lixx Mr. Grumpy™

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    Japan moves to weaken the yen
    Heck when I joined up here it was 117 yen per dollar, but it's been the dollar which has been lower than 100 yen since March 2008.
     
  5. Rich

    Rich Die-Cast

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    Japan moves to weaken the yen
    Man has it been that long !

    I remember the good ol days as well, YJA was a playground.
     
  6. Lalo

    Lalo Mini Boss

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    Japan moves to weaken the yen
    those were the days.
     
  7. VELOCITRON

    VELOCITRON Comment King

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    Japan moves to weaken the yen
    Totally - I can remember coming over here for the first time and getting something like 115 JPY on the dollar (and that was at the exchange booth - the actual rate was closer to 120 or 122!)

    I would love to see the 100 JPY to 1 USD again - the current situation is probably great for importers now, but when just about everything you do revolves around export it makes things considerably less pleasant.

    Did get a killer deal on the MISHKA 4th of July sale, though...
     
  8. Lixx

    Lixx Mr. Grumpy™

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    Japan moves to weaken the yen
    Actually I remember surfing on YJA back then and every search brought up like 20 pages (100 per). It literally was like a candy store. Now it's maybe 6 or so. Some of the older companies like Charactics, Rumble Monsters etc you don't even get a hit some days. Times are a changin'...
     
  9. Polyestercowboy

    Polyestercowboy Addicted

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    Japan moves to weaken the yen

    Yah totally! First time I went to Japan, back in 2003-ish it was 120 yen to the dollar. These new rates totally F me on buying anything now. :cry: Heres hoping they can bring it down a bit more
     
  10. ultrakaiju

    ultrakaiju Die-Cast Staff Member

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    Japan moves to weaken the yen
    Yes, living here makes you appreciate how many ways of making ramen seem interesting you can come up with, and learning to love it when you can find some for under 100 Yen.
     
  11. andy

    andy Mini Boss

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    Japan moves to weaken the yen
    People still send me vegetarian instant ramen from Taiwan. :lol:
     
  12. jebcrow

    jebcrow Side Dealer

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    Japan moves to weaken the yen
    Yes,,I hear you!!

    The ££ to ¥¥ rate has almost halved in the past six years...

    I remember going to Tokyo in autumn 2005 and the going rate was ¥230 to £1 :shock:

    I felt like a kid in a candy store...

    Now with the rate being ¥128 to £1,,,I feel like a pauper scrapping pennies for a piece of toast...

    Sad,,,as I REALLY want to go over for a visit soon,,but just can't justify or afford it with the way things are going....
     

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