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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (11032)	3/31/2004 7:35:04 AM
From: russwinter	Read Replies (3) \| Respond to of 110194

$45 billion in intervention and bond rigging in just one month, an unbelievably inflationary, and stupid policy. They can't continue on, and now admit it. I don't think the MOF can get the votes from their legislature to fund this amount. I love how these guys just declare these failed policies successful. I'm sure the Fed will do the same thing, once they get a half assed decent jobs report. They question is, without $45 billion a month from Japan, how does the US finance one trillion plus twin deficits? Reuters UPDATE - Japan loses battle to keep yen below 105 per dollar Wednesday March 31, 5:44 am ET By Mariko Hayashibara TOKYO, March 31 (Reuters) - Japan lost a battle on Wednesday to stop the yen from strengthening beyond 105 per dollar, a level that authorities had seemed determined to defend and which big exporters have said is crucial for their competitiveness. Despite repeated, aggressive intervention in the past year, the yen has strengthened because of a recovering economy and a rising stock market, as well as concern about geopolitical risks that have undermined the dollar against most major currencies. As speculation grew that Japan's heavy intervention may be scaled back in the new fiscal year starting on Thursday, the yen finally broke through the perceived line of defence. The Ministry of Finance said its foreign exchange intervention totalled 4.706 trillion yen ($45.28 billion) over the last month, up from 3.342 trillion yen in the previous month. That was the third largest monthly volume of intervention on record, but traders say the intervention seems to have slowed in the last two weeks and is likely to be less aggressive in the coming months as the economy recovers. "With recent economic indicators coming in strong and Japanese share prices rising, the authorities may be thinking they don't need to be particular about the 105 yen level," said Tohru Sasaki, chief forex strategist at JP Morgan Chase in Tokyo. The 105 level has long been seen as crucial for officials worried that a strong yen could derail the export-led economic recovery that is taking hold after a decade of stagnation. The MOF has spent more than 35 trillion yen ($337 billion) in yen-selling intervention since last year. Many Japanese exporters such as electronics giant Sony Corp (Tokyo:6758.T - News) have made 105 yen the basis of their planning for the 2004/05 business year. But Japan's intervention has also been criticised by its trade partners, who say that keeping the yen artificially low gives Japan an unfair trade advantage. Finance Minister Sadakazu Tanigaki on Wednesday denied that the government planned to change its currency policy. "Our basic stance has not changed -- that it is desirable for exchange rates to reflect fundamentals. When that is not the case we will do what we have to do," Tanigaki told reporters. At a later news conference, however, he said that Japan's economy had grown more resilient to a stronger yen -- a remark that added to doubts about Japan's resolve to intervene heavily. "Tanigaki's comments were worth taking note of because he said explicitly that Japan can put up with a stronger yen," said Bhanu Baweja, strategist with UBS in Singapore. END OF BUSINESS YEAR A senior MOF official also denied that the end of the fiscal year had any relevance for the government's currency policy. "As we have been saying repeatedly, the idea that we will change our intervention policy after a certain point in time is merely speculation," the official told Reuters. However, persistent talk that Japan can not continue to intervene at the recent pace has fuelled the yen's latest rise, which accelerated after the 105 level was broken. The yen rose as high as 103.40 to the dollar, its highest since April 2000. That was a gain of more than eight percent from a trough near 112.35 just three weeks ago, which was reached after an aggressive round of Japanese intervention that prevented the yen from breaching the 105 barrier in an earlier attempt last month. The yen was also up 14 percent from around 118 to the dollar where it finished on March 31 last year. The Japanese authorities may have intervened again on Wednesday, traders said, but that could not hold back yen bulls, spurred by expectations that the Bank of Japan's quarterly "tankan" corporate survey to be released on Thursday would show a further recovery in the economy. The report is expected to show that the export-led recovery in the manufacturing sector is reaching non-manufacturers, underscoring the view that the economy may have reached a stage where a strong yen is no longer such a big risk to growth. Japan's gross domestic product expanded at its fastest pace in 13 years in the final three months of last year, clocking growth of 6.4 percent on an annualised basis in real terms. The Nikkei share average briefly fell after the yen's surge but bounced back to close 0.19 percent higher on the day at 11,715.39 -- a gain of 47 percent for the business year. Criticism of the government's intervention has also been growing in Japan. In a heated exchange in the Lower House on Wednesday, Democrat Fumihiko Igarashi called the intervention policy "stupid" and likened it to a dependence on narcotics. "This intervention is stupid, because it's a fight we can't win," Igarashi said.