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Policymakers warn against excessive yen volatility

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By Leika Kihara and Kaori Kaneko

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“In general, excessive exchange-rate volatility is undesirable,” Kyodo news agency quoted Finance Minister Taro Aso as telling reporters before departing Tokyo to attend a Group of Seven finance leaders’ gathering in Germany.

In other words they want to be able to print and squander as much currency as they can without the free market interfering and lowering the value of the their currency. If governments don't want currency volatility, they need to be much more fiscally respnsible.

8 ( +9 / -1 )

I guess that this will make most of the Bank of Japan guys as happy as a pig in sh#t! This will help them reach their 2% inflation rate, force people to stay home instead of traveling abroad, using more money here, help line the pockets of the big exporters, all the while crying poor and not having to pay higher wages. I'd say its a win, win win, except for us poor schmucks!

8 ( +8 / -0 )

The Bank of Japan is the modern day Robin Hood in reverse. They rob from the very poor, as well as the not so poor, and donate them to the very rich. Print more Yen, quantitative easing, money without actual wealth being generated = further lowering standard of living in Japan.

1 ( +2 / -1 )

Japan's economy is all about helping the big companies export, it's shocking

3 ( +4 / -1 )

Japan’s export-reliant economy has historically suffered from a strong yen, so many policymakers have welcomed mild yen declines, but some of them have begun to worry about the drawbacks - such as hurting consumer sentiment by pushing up import costs and food prices.

No sh*t Sherlock! That sword has two edges, and what may help fatten the profits of the export-oriented firms, also bites the average family in the butt with higher costs, as mentioned, on things like imported food. But, until the Japanese economy starts to gain some real steam, while America's is performing relatively well, the yen will likely continue to decline.

-4 ( +0 / -4 )

I recall comments I have made here previously, such as:

"This Aso jaw-boning may help to keep the yen steady in the short term while European issues have the focus, but if the US economy continues to improve on the back of it's energy production boom, the yen will likely fall to 125 against the dollar later this year or 2016, and if I hazard a guess it will probably drop to 130 and 140 in fairly short order after that."

http://www.japantoday.com/category/business/view/aso-urges-boj-to-be-mindful-of-weak-yen-risks/comments/popular/id/5242266

So 124 we have today, 125 is just over the horizon. 130 yen in 2015 seems probable.

The yen's multi-decade strength is well and truly over. The trend has reversed, and how fast it has happened. Living in Japan is still reasonable, but I feel it best not to keep more than quarter of one's savings in this currency, which is now essentially backed by government debt now that the central bank is buying it all.

I pray for a further global economic hiccup, such that I might be able to dump more yen at better prices on any temporary increase in the value of yen. The once proud yen is no longer a "safe-haven" in reality.

1 ( +1 / -0 )

@fxgai I agree that the yen is no longer a safe haven and that the yen strength is pretty much over as a value backed asset, but read my comment on the other yen news story here today at http://www.japantoday.com/category/business/view/rush-to-dollar-assets-costing-japanese-investors-dear to see where things are and how they got there.

Will it hit 130 sometime soon? -Maybe. Will it stay at 130 or above? That answer lies in how strong the world's economy is. As soon as world markets dip (its inevitable someday) then the yen starts to get reverted to pay off loans, and then you will see it fall. How far depends on how much of a dip (aka "market correction") the world takes. The last one was so big it took the yen up to 75. That's unlikely to happen again, but 100 isn't.

0 ( +1 / -1 )

Agree Supey11, anything is possible.

Some serious policy changes in Japan could also strengthen the yen too, but Abe and Kuroda seem pretty happy with the direction things are going at the moment.

Indeed that global economic hiccup could prompt longer term speculative flows to increase demand for the yen, and that's the sort of demand that I personally would be happy to help accommodate.

1 ( +1 / -0 )

"Volatility"? Isn't that a word for when the price seesaws dangerously upward and downward?

I didn't know you could apply that word to something whose value only ever goes down, and by government design.

As the saying goes, this must be some new meaning of the word "volatile", of which I was not previously aware.

2 ( +2 / -0 )

The yen has only one way to go, down down down. Best to hold as little of your assets as possible in this weak loser of a currency. I keep my assets in dollars and swiss francs. I hope everybody here does the same.

-3 ( +1 / -4 )

I gave up on the yen a year ago and turned to investing in foreign currencies. Most of my income now comes from abroad When I see how Japan used to be and how it is now I feel sympathy for the younger generation here. Japan's government is investing trillions of yen abroad when services and education is being cut. I sometimes wonder if there is some malicious plot afoot to crush the population here.....?

0 ( +1 / -1 )

umbrella, I tend to agree, and always enjoy reading your yen bashing comments!

Dollars are my current favourite, unfortunately I always felt Swiss Francs were too expensive to buy any. Well done to you on that. But one can't rule out sudden shocks / changes that could send the money flooding back, even if only temporarily. I pray.

kurisupisu,

I gave up on the yen a year ago and turned to investing in foreign currencies.

I think of it self-preservation, more than investing. Investing usually involves risk, but holding on to yen was where the risk has been since Abe came to power...

There's a line in the news story about the swimmer convicted in Korea of stealing a camera today, which went "The court ... ordered Tomita to pay a fine of one million won ($890)"

Today 110,000 yen = $890, and 1,000,000 won = $890.

It's fascinating to ponder when and how South Korea came to have so many zeros on their currency. And what might occur here in Japan in future.

0 ( +0 / -0 )

*The once proud yen is no longer a "safe-haven" in reality.***** and that is a good thing, we all say what happened after the WFC and people all dumped money in the yen causing it to rise to historic highs. No currency wants to be a safe haven it just artificially inflates ones currency making your country less competitive than anothers. The $ is rising mostly due to better economic condititions and a rate rise thats expected this year. all the while Japan and the EU are now doing the Feds QE , paybacks a bitch

0 ( +0 / -0 )

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