This came out of a popular website today. >>Japan's capital flow data came out today, and the numbers are huge. About 3 trillion yen (roughly $23 billion) went flying out the door in April -- compared with a paltry 7.8 billion yen the previous month. Nightmare time for Mr. Yen.
The foreign exchange law was changed April 1, and the result hasn't exactly been trivial. The breakdown of the numbers shows that Japanese investors bought 2.84 trillion yen worth of foreign securities in April while foreign investors sold about 250 billion yen of Japanese stock and bonds. So who did all this buying? Who has that power? Life insurers (973 billion yen), banks (718 billion yen) and trust banks (544 billion yen) -- that's who. And I might add that these figures are for foreign bonds, only.
Part of this orgy of foreign asset buying has to do with the serious weirdness that accompanies every fiscal year-end in Japan. To count a profit on a trade, you have to actually sell the security. So some portion of the securities that the Japanese institutions bought in April just replaced the ones they sold in March. But that is only part of the story because the overall figure for capital outflow was, as mentioned, only 7.8 billion in March.
Now that is interesting. Very interesting indeed. Maybe now we know why senior ministers like Sakakibara are so crazed on topics like the level of the yen and short-term interest rates. Maybe we also know why they staged the futile attempt to strengthen the yen last month. In fact the approximate size of the Good Friday intervention in dollar/yen was thought to be a little over $20 billion, which just happens be close in size to the aforementioned $23 billion capital outflow. And ever since, certain LDP party members have been spouting off about the need to raise short-term rates. It might also explain some of the inflammatory remarks that Sakakibara made about the U.S. markets having peaked. In other words, the guy is looking more and more like Hans Brinker every day.
I stick with my opinions -- a lower yen is one of the best things that could happen to Japan. And the BoJ should keep the interest rate low, or even lower. From a look at the wire reports today, BoJ Governor Hayami is telling exactly that to Hashimoto -- so there is some hope that Japan will get rescued from the wrong-headed thinking of the rate hike mob. <<
I can't figure out the last paragraph? Makes no sense to me. Oh well, I thought I would just share it in case anyone is interested.
MikeM(From Florida) |
