Archive for the ‘Japan’ category

Tug Of War For Currencies

October 29, 2010

With many countries attempting competitive devaluation at the moment, the tug of war between currencies is being played out on a global scale on the eternal premise that if one currency goes up in value, another must come down; as is the nature of ‘valuation’ in the global markets.

Because of this nature, by definition, no two currencies can move in the same direction. One’s gain is another’s loss.

These changes are being fortified and artificially exaggerated by countries such as China and Japan interfering with their own currencies in order to counter-act inflation in the market. They do this by effectively buying and then selling their own currencies to generate currency movements that would otherwise have been different.

Such interference has generated an enormous amount of tension between countries (those who condone the practice, and those that do not) and the situation has been ominously labelled the ‘new currency wars.’

Two countries in the limelight at the moment are the US and China who have been publicly opposing each other at a host of financial conferences and crisis talks. The US is voicing concerns over China’s interference in it’s Yuan (otherwise known as the Renminbi) which it terms as currency manipulation.

In response to this, China has branded the US as using them as a scapegoat for their own economic problems which include a sluggish economy fuelled by high unemployment.

As more and more countries jump on the intervening band-wagon, we are seeing countries such as Brazil, Japan and Korea becoming involved in the global tug of war, as temperatures continue to rise.


Yen Rises on US Economic Worries

July 29, 2010

Growing concern that the global economic recovery is slowing down has sent a wave of jitters into the forex market.  After a healthy bout of rallying over the past few sessions, the US dollar sank on Thursday as investors headed for the refuge of the Japanese yen.

Stock markets also weakened in Australia after a weak lead from Wall Street.  However, most analysts put this down to corrective movements rather than a great deal of anything else.  That said, until elections are over in Oz, investors are likely to remain a bit on the jumpy side.

“Silly season” is well underway in the UK and in Europe, as most people go on their annual summer holiday.  With lower numbers in the office, companies are hoping that there is better economic data to come, which will enhance the ‘back to work’ feel come September.

Japanese Prime Minister Quits

June 2, 2010

The Japanese prime minister Hatoyama has quit together with his powerful right-hand man ahead of the upper house elections in July.

Hatoyama, who took power 8 months ago in a flurry of fresh starts and change, has now left the country in the midst of a deficit that sits at a massive 200% of gross domestic product.

The yen took a dive on the news, as investors worried about the political uncertainty surrounding Japan.  However, it is expected that this uncertainty will be short lived as Hatoyama’s replacement is announced.  The favourite to take the lead is finance minister Kan, who is known for a tougher stance on fiscal policy.

With Kan at the helm, investors are likely to receive comfort in the hope that he will do more to cut public spending.

The euro zone’s problems just never seem far away these days, with the latest blow being unemployment figures.  The total amount of jobless people in the region now sits at over 15 million; in April it reached an all-time high.

Japan’s Finance Minister to Step Down

February 17, 2009

Yesterday the author posted news of Japan’s finance minister Mr Nakagawa, who caused worldwide outcry after the G7 summit.  During a press conference, he showed signs of what appeared to be one too many glasses of wine..

Slurred speech and a seeming inability to keep his eyes open raised not just eyebrows but gave voice to Japan’s opposition party, who called for his resignation.  Mr Nakagawa denied having issues with alcohol and said that the reason for his odd behaviour was due to the fact that he had overdosed on a cold remedy.  He claimed to have had but a sip of wine before the press conference.  He said that his political future was now in the hands of PM (and close ally) Taro Aso.

Today however, he has announced that he will step down after the new budget is released.  Does this indicate concession of a need for some time on the wagon or simply a wise retreat at a time when Japan’s leading party needs all the positive spin it can get?  General elections are due to take place there later this year…

Japan Economy and Government Misery

February 16, 2009

Gordon Brown may recently have been in the spotlight for various blunders, but today is a rainey Monday for Japan…

As the world’s second largest economy slammed the alarm clock off for the beginning of the working week, there was not much to smile about.

Firstly, the GDP has fallen with the economy having contracted by 3.3% in the last quarter. Bad news for car manufacturers Toyota, who released their worrying sales figures near the end of 2008. Electronics are also a major element hit by the ailing economy. Consumer confidence within Japan has fallen as well however, in light of rising unemployment figures.

On the upside, this news did not have a major effect on the stock markets, with the Nikkei share index dropping by only 0.4%. It will be interesting to keep an eye on currency reports to see what happens over the next few days.

On the Government side of things, life isn’t too peachy either. The Prime Minister of Japan, Taro Aso, is facing failing popularity as the day of elections draw ever closer. His recent plan to inject around 3 trillion yen into the country as a stimulus was met with minimal support from the public and from within his cabinet. Added to this headache, he must now decide what to do about the gaffe made at the G7 summit this weekend by his Finance Minister Shoici Nakagawa. Mr Nakagawa arrived for a news conference in Rome this weekend looking and behaving in a decidedly odd way. His speech was slurred, and in one instance he mistook a question directed at someone else for him….well, his head was down with his eyes closed at the time, so it’s a fair mistake to make…..Oh, and it was blamed on the wine he’d alledgedly been consuming beforehand. Mr Nakagawa defended himself saying that he had had too much cold medicine and had drunk less than a glass of wine before the news conference.

After the incident (and ensuing media circus), opposition parties demanded Mr Nakagawa’s resignation or sacking. The latter said that his political fate must now lie in the hands of Prime Minister Aso.

Mr Aso is also a close ally to Nakagawa…..

The Future for the Yen in 2009

January 28, 2009

The author is on a bit of a roll these days with concentrating on world currencies.  It is an interesting time for currencies though.  To compare exchange rates may not be everyone’s cup of tea but it is interesting if you look at some of the basics.  So far we have concentrated on the pound, the euro and the US dollar so now let’s have a quick look at the Japanese yen.

This currency has had a pretty strong year compared to others – 13 year highs against the US dollar and a rise by over 35% against the sterling – but as we have seen with the Euro, this isn’t necessarily a good thing.  Japan relies heavily on export, and obviously people are less likely to want to buy from the Japanese if their currency is so much stronger than theirs.  Toyota, the world’s biggest car maker, reported its first losses in 70 years.

The Bank of Japan has also been aggressive in its rate cutting and even reached 0.1%, just shy of zero.  So until they calm down and the market as a whole gets less volatile, things will remain difficult for the yen.  Sure, Japan could ask for assistance from its peers in order to try and weaken their currency, but the US and Europe are very unlikely to want to make their currencies stronger (especially Europe who are already in a situation very similar to Japan).  So perhaps it will be something of a waiting game until things steady themselves out before people gain confidence.

Obama´s Package of Hope for Economy

January 5, 2009

Barack Obama becomes president officially on the 20th January.  As soon as possible after the inaugration, he intends to activate his proposed stimulus package – at the moment being quoted as being around the $800 billion amount.

The package has seemingly pepped up the mood of the markets in Asia, where shares were up again at the end of the first session of 2009.  The Japan economy was decidedly gloomy this time a couple of weeks ago, with grim predictions on the back of poor exports from their main car manufacturers. 

Obama: beacon of hope for the global economy?  It certainly looks good so far…


News source: