Posted on 09/15/2010 5:59:54 PM PDT by bruinbirdman
Japan has launched a huge intervention in the foreign exchange market for the first time since 2004 to stem the rise of the yen and head off a deflation spiral, prompting harsh protests from top US Democrats on Capitol Hill.
The move is the latest dramatic twist in a world where a growing number of countries are seeking an economic edge through 'beggar-thy-neighbour' currency policies. It came as Congress held a hearing on China’s yuan suppression amid ever louder calls on Capitol Hill for sanctions against Beijing, and for pressure on Korea and other countries in Asia to halt currency intervention.
Sander Levin, chair of the House Ways and Means Committee, said Japan’s action was a "deeply disturbing development. China is not the only country with a predatory exchange rate policy."
The Bank of Japan intervened alone in the early hours, selling an estimated ¥1 trillion (£7bn). Finance minister Yoshihiko Noda vowed “bold action and further intervention if necessary.”
The move drove the yen from ¥83 to ¥85.6 against the dollar, and set off a powerful bond rally. Tokyo’s Nikkei index jumped 2.3pc to 9,517, led by exporters. Mazda rose 6pc, Sony rose 4pc.
David Bloom, currency chief at HSBC, said Japan should step up action over coming days rather than dribbling out intervention as it did from 2003-2004, buying $350bn of US bonds over fifteen months. “They need to hit the market hard, fast, and furious, because as time goes on the effect will dissipate,” he said.
Fiona Lake at Goldman Sachs said Tokyo was forced to act after funds seized on the leadership victory of premier Naoto Kan as a green light to buy the yen. “We would not rule out new lows in the dollar against the yen,” she wrote in a client
(Excerpt) Read more at telegraph.co.uk ...
Sternly-worded letter on the way.
they can’t beat the US printing presses. The more they try, the worst they make US, and the more US is forced to print even more USD to pay their debt. Never ending cycle, where Japan will experience the same inflation that will hit US
People sure do like their drama. From the media's 'predatory exchange' to our 'printing presses', everyone sure loves to get their pantyhose in a wad over one contrived issue after another.
OK, so can anyone tell me why today's rate is the end of the world now even though it didn't end when we had the same rate in the past? Or if rate changes are the problem, then why isn't anyone happy about the stability we've been looking at for 20 years?
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