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We were at 148 Yen to a $ and expecting to go up to 155- it was in this background that China was behind the doors pleading for Rubin to press the Japanese who wanted to lead the domestic demand problem through export led growth, however if every one does it the world will be in grip of flood of goods, the seconds phase of rate cuts is about monetary policy, in my opinion it is a global co-ordinated effort to rationalize things- this is the area of AG and not Rubin , as rate cuts were announced by Japan unexpectedly we saw a rush to $ from Yen-- as Yen becomes too unattractive to hold. I am informed that lot of money is being repatriated to Japan and this blip post rate cut is normal- I would think that overall the exchange rate policy and monetary policy has inherent contradiction but it is manageable, as markets and corporations if we have a permanent fiscal stimulus respond to this cut we may see Yen demand going higher, in very term this can have and look what appears a contradiction but if the engine kick starts and we see Nikkei able to take out 15700 strangle hold we may see some Yen demand as Japanese assets may look little attractive, the bargain hunters and stock funds may look back to Japan as a feasible option, so far the implementation of the plan looks perfect first remove the glom and disaster, buckle up the rampage of speculators from the global markets , than talk the market higher at a perfect timing by seeing that Aug meeting was more pro to a neutral stance, and last is this rate cut.. I picked this as a co-ordinated effort on Friday, I am happy it is being reported as such by REUTERS my currency broker Karman informed me just now.. |
