Posts Tagged ‘Yen’

Asian shares saw a dramatic increase following this weekend’s meetings in Europe, which resulted in “good progress.” According to European finance ministers, the Eurozone plans to boost its $610 billion rescue fund in an effort to draw investors and convince markets that it is indeed capable of protecting floundering countries such as Italy and Greece.

Few real details were released after the meetings, though. Investors have continued to focus on the yen, which has reached a record post-war high of 75.78 against the dollar. As a result, Japanese finance minister Jun Azumi has called for “decisive steps” to slow the currency’s dramatic rise, amid concerns that the yen will hinder the country’s export market.

Hong Kong and Shanghai both climbed this week as well, as improved manufacturing data was released from China, but Europe’s crisis does not seem to have slowed. Debates are still common as the Eurozone struggles to find a solution for the economic issue without further provoking its richer nations, such as Germany, who have placed their limit after repeatedly bailing out the region’s weaker members.

“The mood of trading is generally optimistic that Eurozone policy makers will announce significant measures on Wednesday to bolster the bailout fund and resolve Greece’s debt crisis, while also supporting the region’s banks,” explained Stan Shamu of IG Markets.

Japan’s finance minister Yoshihiko Noda has been elected as the head of the ruling Democratic party, and is likely to soon become the country’s next prime minister as well. Japan’s next prime minister will undoubtedly inherit the region’s financial situation as Europe’s crisis deepens and economies across the globe struggle to stabilize, as well as the resurgent yen, new energy policies, the nuclear crisis and the rebuilding of the devastated northeast coast.

A political analyst in Tokyo, Hiro Katsumata, said “Noda needs to call for a national election within the next two years no matter what. The main challenge for Mr. Noda will be the cohesion in the party and to win in the national election.”

The latest leader of the Democratic Party, who also served as prime minister, was Naoto Kan. He resigned last week as a result of heavy criticism following the earthquake and tsunami in March, as well as the economic status of the country.

Steve Chao reported that “the question is whether the next leader will overcome the hurdles Naoto Kan did not manage to overcome, and, he has to show the public he is able to make the tough decisions that will help the country overcome its economic hurdles.”

Financiers across the globe were disappointed in Japan’s move to counter the rising strength of the yen.

Early this past Wednesday, the dollar relinquished gains in comparison to the yen in Asia, increasing concerns and prompting additional measures to stem the growth. Japanese Finance Minister Yoshihiko Noda then held a press conference to discuss such measures.

The conference ended with a statement pledging a $100 billion facility dedicated to limiting the yen’s rise by encouraging mergers and acquisitions, as well as providing aid to domestic corporations in securing energy resources. The ministry will also now require currency trading reports from leading financial groups until September.

Investors around the world were unimpressed with the results of the conference, explaining that the measures would have no real impact on the situation and would not be enough to contain the increase.

“They’re hoping to get as much as they can from talk, just ramping up the threat without taking any more steps,” said Sean Callow of Westpac.

Yuji Kameoka of Daiwa Securities added that “The FX market is a global market. It is hard to contain FX movement with only these measures.”

Tokyo – In the fight against the economic crisis, the Japanese Cabinet issued another economic stimulus package at the equivalent of 44 billion euros. The money will go to employment and social programs, assistance for small businesses and investments in infrastructure.  There is hope that the package will stave off renewed appreciation of the yen. The package will be financed through a supplementary budget, yet Prime Minister Naoto Kan will still bring the stimulus package to parliament this month.

On Tuesday, the Japanese central bank had lowered its key rate for the second-largest economy in the world to almost zero percent to combat deflation. The bank announced  a program for the purchase of securities with a total of five trillion yen (about 44 billion euros) to help support the economy. The biggest problem for the recovery of the Japanese economy is the soaring yen. This has caused goods imported from abroad to be cheaper and Japanese exports to be one of the more expensive goods in the world.