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Aso warns against yen spike as investors seek safety on virus spread

25 Comments
By Tetsushi Kajimoto

Japan's finance minister warned on Monday against investors pushing up the yen rapidly, saying the government will closely watch market moves which he described as "nervous" amid the global spread of the coronavirus.

Taro Aso made the comment at an ad-hoc news conference held after the yen jumped more than 3% to a day high of 101.58 per dollar, its highest in three years.

The benchmark Nikkei share index tumbled to 14-month lows on Monday, on rising fear that the spread of the coronavirus epidemic could severely damage the global economy.

"We must watch currency and stock market moves for a while. We'll examine them carefully," Aso told reporters.

Asked whether Japan needs to intervene in the currency market to stem the yen's strength, Aso declined to comment.

Aso's comment came after a senior finance ministry official stepped up warnings that the authorities would watch market moves with a "greater sense of urgency" amid the virus fears.

The spread of the epidemic has prompted heavy selling of riskier assets by investors and a scramble into assets such as the yen, which are perceived to be safer havens during times of financial distress.

Japanese policymakers tend to talk down gains in the currency, fearing that sharp appreciation hurts competitiveness of the country's goods overseas and further damage the export-led economy, which is teetering on the edge of recession.

"Nervous moves are seen" in the currency market, the official told reporters, after the yen broke through 104 per dollar.

The official added that he would consider whether to hold a meeting with officials from the Bank of Japan and the financial watchdog to discuss financial markets.

Japan last intervened in foreign exchange markets in 2011 to stem yen gains in the wake of the Fukushima nuclear disaster triggered by large earthquakes and a tsunami. Tokyo has stayed out of the market since then.

© Thomson Reuters 2020.

©2020 GPlusMedia Inc.

25 Comments
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Mystifying.  How the yen represents safety makes no sense,.  Except that whenever there is any kind of global upheaval everyone rushes to buy it and so it goes up.

The underlying facts (aging population, rampant money printing, a useless government, one of the more vulnerable countries to the virus - allegedly) just don't support this "investment view".

11 ( +11 / -0 )

OIl, stock and monetary exchange manipulation going on. IF the so called investors just stuck together like a den of thieves and let the one nut manipulate the market, everything would be fine.

6 ( +7 / -1 )

They're looking at it, in fact they are even staring at it, harder and harder, says Aso.

"Don't you dare move another inch, or I'll, I'll........................ have to magnify this even further!"

3 ( +3 / -0 )

It is absurd. Should be 150

0 ( +4 / -4 )

Heaven forbid the value of the working class's savings should go up from time to time, right, Aso?

4 ( +5 / -1 )

WakarimasenToday  02:28 pm JST

Mystifying. How the yen represents safety makes no sense,. Except that whenever there is any kind of global upheaval everyone rushes to buy it and so it goes up.

The underlying facts (aging population, rampant money printing, a useless government, one of the more vulnerable countries to the virus - allegedly) just don't support this "investment view".

Yup. A huge asteroid could come crashing down in the Pacific and all of Japan could dissappear into the sea and there will be investors buying up JYen because it's "safe".

Agree with others, USD 1.00 to JYen 150 is what it really should be.

5 ( +6 / -1 )

Agree with others, USD 1.00 to JYen 150 is what it really should be.

Just how is that calculated other than American's wanting more yen for their dollar?

Personally I saw it coming so moved some money last month.

-2 ( +1 / -3 )

Kind of regretting not converting my little paypal balance from dollars to Yen last week.......

0 ( +0 / -0 )

Traveling for a while at the end of this Month. Baht, rupee, ringgit all weaker vs. the yen. Excellent

1 ( +1 / -0 )

Japanese Yen is technically more stable as the ecosystem is still fairly domestic, most US sectors still have a huge reliance on China for supply and manufacturing.

However it is not always a good thing as Japanese exports are a lot more expensive due to this and if inflation occurs due to this then domestic consumption and exports will suffer badly.

3 ( +3 / -0 )

Those who are claiming 150 to the dollar are completely at odds with the market’s assessment of true value.

2 ( +5 / -3 )

“...further damage the export-led economy, which is teetering on the edge of recession.”

At only around 16%, Japan’s exports to GDP ratio ranks 4th lowest behind the US, India, and Belgium as the LEAST export reliant economies among the top 25 globally.

https://en.m.wikipedia.org/wiki/List_of_countries_by_exports

The yen will continue to strengthen so long as the country refuses to reconsider its one track mind obsession with a massive and unsustainable surplus trade imbalance that is largely a product of the closed nature of it’s markets. Its natural level is somewhere in the range 70~80 yen to the $US and a lot stronger against many other currencies. Conversely, a verifiably more open market will help the yen stabilise, probably between 90-100.

-1 ( +3 / -4 )

aso, agian u got it wrong, yen is no more safe. japan is no more safe.

-4 ( +0 / -4 )

of it’s markets. Its natural level is somewhere in the range 70~80 yen to the $US and a lot stronger against many other currencies. Conversely, a verifiably more open market will help the yen stabilise, probably between 90-100.

What are you talking about the last time the yen was 70 was when America was deep into its last $5trilion monetary easing printing . In the good times of the 80s before Reagan forced the plaza accord onto Japan it was around 250. Japans economy is far from healthy robust its speculators that somehow think buying yen is safe when theres market turmoil. No with the strenght of the US economy Jpy Us$ Should be around 115-120

2 ( +4 / -2 )

“What are you talking about the last time the yen was 70 was.....the good times of the 80s before Reagan forced the plaza accord onto Japan it was around 250. Jpy Us$ Should be around 115-120”

The yen had already fallen to the 180s by 1978. There was a subsequent temporary weakening back to the 250 level but it wasn’t long before market fundamentals reasserted themself and the yen once more resumed its long term strengthening. The Plaza Accord was the natural concomitant of Japan’s economic policies that were designed to maximise exports via a cheap yen while simultaneously barricading Japan against superior imports. While it’s now considerably more open than a generation ago, Japan has a ways to go before it can honestly claim economic openness on a par with most of its major trading partners.

https://www.macrotrends.net/2550/dollar-yen-exchange-rate-historical-chart

-3 ( +2 / -5 )

The US will be in a dire state in 2-3 weeks.

Yen May be a buffer but gold is much better...

2 ( +3 / -1 )

I guess there's a demand for Japanese Toilet paper from overseas...

0 ( +0 / -0 )

The shortage of toilet paper is at the sale point not at the production. The panic buying emptied the selves.

2 ( +2 / -0 )

The Plaza Accord was the natural concomitant of Japan’s economic policies that were designed to maximise exports via a cheap yen while simultaneously barricading Japan against superior imports. 

oh please Japanese cars of the 80s were far better than anything AMerica produced and they were cheap, Reagan couldn't handle that fact that Americans loved Japanese electronics/ cars and still do to this day so forcing Japan to artificially appreciate it currency to the benefit of AMerican manufacturers. the result was Japans economy never really recovered from this. Also now 70% of Japanese car bought by AMericans are made by Americans, also of note that many of American car manufacturers wouldn't be around today if it wasn't for US taxpayer bailouts

4 ( +5 / -1 )

https://www.macrotrends.net/2550/dollar-yen-exchange-rate-historical-chart

september 1985 when the Plaza accord was forced onto Japan exchange rate was 220yen/$1

in less than 3yrs it was around $120/$1 effectively making all Japanese made goods exported to the US almost twice as expensive. All because America was not competitive and still isn't today in many aspects of trade

watch what happens in the next few months Trump thinks that the US wont go bankrupt because it can print more money aka another big round of quantitative easing.

Yet still many blame Japan as manipulators of currency. LMFAO

4 ( +5 / -1 )

NFI LMFAO

In Oct 1978 円/$ was 180. Too bad that doesn’t fit your narrative. By all rights the yen should’ve been appreciating long before, especially from the artificially derived 360 ( 円=circle) which America tolerated far longer than Japan deserved.

As long as Japan continues to crank up unconscionably large trade surpluses that are a product of its tightly protected (read grossly inefficient markets) and refuses to offer the same trade openness that other countries extend to Japanese firms, so we shall continue to see upward movement in the yen. Once it goes sub 100, we’ll soon be looking at 90 as the next breakthrough point.

“Trump’s printing more money” Are you for real? Japan authored the textbook on quantitative easing!

-4 ( +0 / -4 )

In terms of market rigging, Japan’s car market is exhibit #1. Indeed, it’s the outlier par excellence when it comes to market share held by foreign automobiles.

http://www.worldstopexports.com/cars-imports-by-country/

In all of the other major markets, including China and Korea, the foreign vehicle market share is waaaayyyy higher than Japan’s. German automotive excellence doesn’t prevent that country, with its 40+ million fewer people, from importing automobiles five times greater in value than Japan. Even South Korea, with only about 40% of Japan’s population, will soon overtake Japan in the value of foreign vehicles sold there compared to here. When most of the US-Japan trade imbalance is comprised of automobiles and automotive parts, it’s a no brainer that Japan must finally lower the drawbridge and embrace reciprocity.

Japan’s apologists continue to rely on that old canard that foreign makers small share of the market is entirely due to the superiority of the domestic product, but German people’s willingness to buy foreign demonstrates how bogus and totally self deluding that argument is.

-5 ( +0 / -5 )

Once it goes sub 100, we’ll soon be looking at 90 as the next breakthrough point.

would you be willing to put money on that. . When Trump starts quantitative easing then all bets are off ever other main currency will do the same. good luck end of the day quantitative easing isnt illegal just frowned upon. Japan sat idle and let is happen in 2008~2010 result was an artificially low US$ of around 78yen/$1. EU Japan UK all sat idle and let it happen. wont be making that same mistake again

2 ( +3 / -1 )

When most of the US-Japan trade imbalance is comprised of automobiles and automotive parts, it’s a no brainer that Japan must finally lower the drawbridge and embrace reciprocity.

well Im in the auto business in Japan and yes Germany automakers do well here because they make vehicles Japanese want to buy, 50% of new car sales in the US are trucks, do you really think Japanese are going to buy huge 2 tonne V8 vehicles that get 15mpg when they can buy a smaller car that actually fits the streets and car parks of japan and get twice the ,milage. Americans expect Japanese to buy American made cars not suited for Japanese, meanwhile Japan has learned to manufacture cars in America by Americans that Americans want to buy. theres a reason why Toyota is the 2nd largest manufacturer in the US. wheres the reciprocity of AMerican manufacturers in Japan!? German manufacturers have shown it can be done and be successful.

Also of note the majority of japanese vehicle exports are from Japan and other Asian countries where they have factories, even Mexico. American factories making Japanese car are almost exclusively sold in America, why do you think that is!?

3 ( +4 / -1 )

Japanese may indeed buy German cars, but they hate being reminded of their propensity for tokenism designed to forestall closer examination of its (compared with Germany) far more protected automobile market. The value of German foreign auto imports is five times greater than Japan’s. Explain that to me, car dealer.

Japan wrote the game book on exploiting the openness of others in order to advance their own economic interests, whilst ensuring the drawbridge was at all times raised sufficiently high to deter or impede all but the successful few who’ve sought inroads into their own market.

They don’t buy foreign cars and a host of other things essentially because the markets here are effectively quarantined from having to go head to head with superior foreign imports. A compliant populace has internalised a false consciousness view that Japanese products are superior. It thrives despite people having zero actual contact with the foreign products they won’t hesitate to bad mouth.

Encouraging people to view car imports as status symbols and not as something that everyman should aspire to owning is one more cleverly maintained barrier that a country like Japan must and will eventually get over.

-1 ( +0 / -1 )

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