Connect with us

Hi, what are you looking for?

News

Yen intervention will not stop sharp declines, official warns

JAPANEXPERTERNA.SE/FLICKR

TOKYO — Japan’s efforts to stop the yen’s sharp falls through unilateral market intervention would only have a limited impact, a senior member of the country’s ruling party warned, as data showed the currency’s recent tumble blowing the trade gap out to a record.

The Japanese yen held above 24-year lows against the US dollar on Thursday, a day after authorities issued their clearest signal yet that they were not comfortable with recent sharp declines in the currency and were preparing for intervention.

The yen last traded around 143.62 per dollar, down about 0.3%, having shot up against the greenback on Wednesday on news of the possible intervention.

Satsuki Katayama, the ruling Liberal Democratic Party’s (LDP) head of a research commission on financial affairs, said Tokyo lacked effective means to combat the yen’s falls and that unilateral interventions would be limited.

“Solo currency intervention won’t be that effective” in stemming sharp yen falls, which are driven by the interest-rate gap between the United States and Japan, Katayama told Reuters in an interview on Wednesday.

Persistently high inflation in the United States and elsewhere has forced the US Federal Reserve to aggressively raise interest rates, giving the dollar a significant yield advantage that has triggered a rampaging rally against its major global peers, including the yen.

Katayama, who is also a former Ministry of Finance (MOF) official with financial markets expertise, said raising Japan’s ultra-low interest rates would also be difficult given the impact that could have on the country’s 550 trillion yen ($3.84 trillion) of bank loans.

That sentiment was echoed by Yuichiro Tamaki, the head of the opposition Democratic Party for the People, who said a rate hike would do more harm than good for the economy and instead called on more fiscal support.

The Bank of Japan on Wednesday conducted a rate check with banks in apparent preparation to step in to reduce the yen’s falls, which sent it up more than 1% and highlighted its nervousness about its steep declines.

WEAKER CURRENCIESJapan’s policy makers have historically favored a weaker currency, which makes exports more competitive, but now worry about the inflationary effect it will have on the cost of everything from food and dining out to utility and transport bills more expensive.

Analysts said the rate check would give only brief support for the currency, as Tokyo could struggle to gain consent from Group of Seven counterparts to conduct yen-buying intervention.

Other Asian economies are also turning their attention to risks from weaker domestic currencies.

In South Korea, the country’s foreign exchange authority was seen selling dollars to curb the fall in the won, after the currency hit its lowest in nearly 13-1/2 years.

Separately, data on Thursday showed the trade deficit hit its biggest in a single month on record in August at $19.7 billion. The blowout follows a nearly 20% slide in the yen since the start of the year.

The weak yen caused particular pain for household budgets that are facing pressure from price rises, said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank.

“When comparing the positive and negative impact the weak yen is having on the situation in Japan overall, there are clearly more negatives,” Sera said.

The trade data showed the average exchange rate was 135.08 yen per dollar, a 22.9% jump of the greenback against the yen from a year earlier. — Reuters

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

News

PHILIPPINE STAR/ MICHAEL VARCAS WASHINGTON D.C. — The United States is seeking to form a coalition of countries to drive negotiations on a global...

News

Buildings are seen along EDSA in Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN By Diego Gabriel C. Robles  THE WORLD BANK (WB) upgraded...

News

Heavy traffic is seen on the southbound lane of EDSA in Cubao, Quezon City. — PHILIPPINE STAR/ MIGUEL DE GUZMAN THE PHILIPPINE auto industry’s...

News

REUTERS THE BANGKO SENTRAL ng Pilipinas (BSP) may deliver a second off-cycle rate hike in early November when the US Federal Reserve is expected...

News

Vendors arrange their goods at a public market in Manila. — PHILIPPINE STAR/ RUSSEL A. PALMA THE ASIAN Development Bank (ADB) is planning to...

Editor’s Pick

With the reversal of the 1.25% rise in National Insurance Contributions happening on the 6th of November, employers across the nation have an opportunity...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.