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business

Japan signals it will act to curb any excessive yen rises

22 Comments
By Daniel Leussink and Yoshifumi Takemoto

Japan's top currency diplomat on Monday warned investors against significantly pushing up the yen, signalling that Tokyo was ready to intervene in the currency market if excessive yen gains threatened to hurt the export-reliant economy.

Yoshiki Takeuchi, Japan's vice finance minister for international affairs, said Tokyo was in regular contact with overseas authorities to respond to volatile market moves.

"As we have been saying, it's necessary to take action based on the G7 and G20 agreement if currency moves have a negative impact on the economy and financial markets," Takeuchi told reporters, when asked whether Japan could intervene in the currency market to stem excessive yen rises.

He made the comments after a meeting of top officials from the Ministry of Finance, Bank of Japan and the Financial Services Agency, which is held occasionally to discuss market developments.

The meeting discussed how Sino-U.S. trade tensions and developments in U.S. monetary policy may have given rise to nervous moves in the market, Takeuchi said.

"On the other hand, we were able to confirm the global and the Japanese economies were in a stable situation," he said.

Asian shares slid to 6-1/2-month lows on Monday and the yuan slumped to a more than decade trough as a rapid escalation in the Sino-U.S. trade war sent investors stampeding to traditional safe harbors including the yen, bonds and gold.

The flight to safety lifted the yen, which often gains at time of stress thanks to Japan's position as the world's largest creditor. The dollar slipped to a seven-month low of 105.78 yen.

Japanese policymakers tend to jawbone markets when the yen rises, as they fear a stronger currency would hurt the country's exports and business sentiment.

Tokyo has stayed away from the currency market since 2011 when it heavily intervened to stem a yen surge in the wake of a devastating earthquake and the Fukushima nuclear disaster.

Japan has stuck to the G7/G20 agreement against competitive devaluation, with a pledge to promote market-oriented exchange rates and use monetary policy to achieve domestic objectives without targeting currencies.

© (c) Copyright Thomson Reuters 2019.

©2019 GPlusMedia Inc.

22 Comments
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Not only trade wars, but currency wars. And it's going to get worse. Watch what happens to the British pound, the Euro, and the almighty (no longer) American $. This is getting interesting, from an international traveler's point of view. Exchange rates, devaluation, and all things related to such phenomena just make us look at other destinations. Oh well, good for those other countries whose citizens will benefit from our spending. No big deal, really.

1 ( +2 / -1 )

Japan's top currency diplomat.....

Dont know why but this just makes me want to laugh out loud. Japan's finance minister is Aso, and before any of these underlings do anything with regards to propping up the yen, he sure has hell is going to have his hands in the decision!

3 ( +3 / -0 )

Why would you want to curb yen rises? Higher yen means high purchasing value and cheaper imports. Japan is the 3rd largest economy with over 120 million people, yet they import almost half that of Germany. Japan's service sector is incredibly undeveloped because of the weak imports. Let the currency go up, so imports can become cheaper, and people can enjoy more stuff on lower prices. That's good for people. More choices leads to higher standards of living, and more imports means more service sector jobs for people, more diversity in the economy. I bet the J-bureaucrats are bribed by the export industry, in particular, the car industry. It's called Amakudari, Google it.

5 ( +7 / -2 )

Why would you want to curb yen rises? Higher yen means high purchasing value and cheaper imports.

You seem to be under the impression that the government cares about the people. They don't. They do care about covering their unsustainable debt, though, because people will notice when they don't receive their pensions and such. What better way to reduce their debt than to reduce the value of the yen? They can count on far fewer people to connect the dots in that case.

It will be a global race to the bottom, with some surprising countries rising from the carnage at the end.

11 ( +11 / -0 )

You seem to be under the impression that the government cares about the people. They don't. 

Too bad not enough people see this obviousness

11 ( +11 / -0 )

If the money you make in Japan is actually worth more in “the world”, you can actually afford to go overseas. Government doesn’t want to lose any travel or tax dollar so that’s not allowed.,also why international flight prices triple during any national holidays.

0 ( +1 / -1 )

Best time for me was a few years ago when yen was 79 to the dollar. In dollar terms my salary was 50% higher and I could save a bit at home.

2 ( +3 / -1 )

@TrevorPeace

Not only trade wars, but currency wars. And it's going to get worse. Watch what happens to the British pound, the Euro, and the almighty (no longer) American $

Not sure I understand you. All these currency moves have a single purpose, to lower the exchange rate between x-currency and the USD, which would make the USD more valuable.

As to whether it's good for USA, NO! Because that would make US industries less competitive, or more to the point, make Trump's tariff largely ineffective. Pop corn a ready for Trump's response, and the Fed's take on this.

The RMB has now broke the 7 ceiling against the USD, China is playing hardball, some would argue currency assault.

0 ( +0 / -0 )

As always, when the sugar hits the fan you fly your money to Japan. Japan is as good as gold. I guess the market does not care about the debt or demographics.

2 ( +2 / -0 )

@ILoveCoffee

Why would you want to curb yen rises?

Needs to be asked alongside 'is Japanese industries that efficient that it can lower prices further and still remain competitive and viable?'

Every other major currencies is following the RMB, you as a Japanese consumer, traveller, etc only have to worry about the cost of travelling to USA or buying US goods, and only temporarily IMO, because the Feds will respond shortly also.

China is lobbing a currency grenade in the mix with its abandoning of the 7 times RMB/USD floor, everyone is running.

2 ( +2 / -0 )

Hmmmm....   What more can they do?  They already have the printing presses running full time.  Own most JGB's.  some of the local stock market.

Maybe should post a 1,000,000 cheque to every household

0 ( +1 / -1 )

Good luck trying to stop the yen rising against the plummeting pound sterling.

Please don't mistake ineptitude for a trade war.

5 ( +5 / -0 )

Your right about politicians not caring about the people, and the banks and currency manipulators don't care either as long as they make huge profits on the currency market. I am a fan of neither politicians or bank and currency manipulators. I receive a meagre pension from the UK which is converted into Yen, so far since Brexit I have lost over 25% of my pension, and add to that, living in Japan doesn't entitle me to the yearly increases that all UK pension recipient receive wherever they may live in the world. Greed, and inept politicians are ruining the world we live in.

3 ( +3 / -0 )

Let the currency go up, so imports can become cheaper,

nearly all of the worlds top economies were built on exports, making your currency strong just forces more manufacturers out of Japan and into other countries, less workers and companies manufacturing in Japan means less revenue for the government and ultimately higher taxes. People may say oh but more business will be created from all those imports, ultimately the majority of the cost of those products will go to the country and workers that manufacturer those products. Unless Japan want to run massive deficits like the US every year then strengthening the yen just wont work especially with a shrinking population. that 20%+ consumption tax will become reality much sooner than later sort of defeats the purpose of cheaper imports.

0 ( +0 / -0 )

Best time for me was a few years ago when yen was 79 to the dollar.

yep and there was a large exodus of Japan manufacturing to China/Asia as a result. less manufacturing in Japan means less government revenue in salary/company taxes, ultimately higher taxes on Japanese long term. as usual most people can't think more than a few paychecks into the future, A strong yen will just accelerate manufacturing and jobs out of Japan, meaning downsizing of J companies and laying off workers and or stagnant wage growth lower bonuses. Its not hard to see the pattern

0 ( +1 / -1 )

hahaha I love it... Japan claims they don't manipulate the yen then release a press release like this.

3 ( +3 / -0 )

Why is the yen rising when exports are not moving ???. Trying to kill local manufacturer ???. Speak of lost brains.

0 ( +0 / -0 )

In 25 years or so trading financial instruments I have never met anyone who made any money, long-term on FX.

4 ( +4 / -0 )

Does the title of the article make Japan a currency manipulator? The Plaza Accord was an intervention in the currency market. When is it okay and when is it not?

1 ( +1 / -0 )

The Plaza Accord was an intervention in the currency market. When is it okay and when is it not?

Yep the Plaza accord effectively forced Japan to manipulate its currency higher compared to the $US. Japans economy has never really recovered from that extortion. Its perfectly fine to manipulate when it suits the US, not when it doesn't suit them. US hypocrisy is thicker than shite. China is now the new US punching bag, unfortunaelty as we can now see theyre not so easily manipulated like Japan was.

0 ( +0 / -0 )

Japan using the "pension" fund to save face. This is why the retirement age is now 75 and why there is not enough money to pay future generation's pensions.

0 ( +0 / -0 )

@gogogo - Pensions are just Legalized Ponzi schemes.

0 ( +0 / -0 )

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