Stronger Yen Causes Anxiety in Japan
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Uploaded by NTDTV on Aug 18, 2010
And the recent rise of the yen is causing some worry in business and financial circles in Japan. There is now word spreading that the Japanese government will directly get involved to try to lower the value of the currency.
Japanese officials and companies are eyeing the yen's rise to almost its strongest in 15 years, with speculation growing that the government may have to intervene to weaken the currency.
The finance ministry and central bank say they are closely watching the yen, worried it could prolong Japan's deflation and slam its export-driven economy.
But J.P. Morgan's Junya Tanase says the government will likely hold off because of current forex losses and a mixed history of success when it last bought dollars in 2004.
[Junya Tanase, Chief Foreign Exchange Strategist, JP Morgan]:
"From an international perspective, it doesn't have the clearance to intervene and that's the biggest reason. Another reason is the foreign reserve losses this year are very large and that will make it tough politically to intervene."
Six years ago Japan spent almost $410 billion to support the economy, but the yen now is much stronger against the greenback and euro.
Major firms such as Toyota, which announced earnings Wednesday, make the majority of their profits overseas, but Tanase says many have become more accustomed to currency fluctuations than when the yen peaked in 1995 against the dollar.
[Junya Tanase, Chief Foreign Exchange Strategist, JP Morgan]:
"Basically, the most important thing for Japanese industry is demand, while of course the currency level has an impact, but the key is demand."
July U.S. sales for automakers Toyota and Honda actually declined on year.
Shares of exporters like Toyota were again under pressure Wednesday, hit by the stronger yen and worries about the sustainability of a global recovery.
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this guy is mangling the english language
waldentree 1 year ago