Home
Commentary: USD correction continues to be postponed !
Will the Fed raise rates any further? !
Korean Won remains ‘stable’ in wake of nuke test !
Pound and Euro move in lockstep !
How does public debt affect currencies? !
UK inflation data buoys Pound !
Russia buys Yen for forex reserves !
Emerging Market currencies hurt by risk aversion !
NZD strength attributed to hedge funds !
ECB lowers rate hike expectations !
Canada promises to forego intervention !
Thai Baht shakes off political crisis !
China’s forex reserves on track to reach $1 trillion !
How high will the Kiwi go? !
G7 avoid talk of Yen intervention !
Commentary: RMB’s appreciation is tied to inflation !
G7 will discuss Japanese Yen !
Foreign exchange market !
Forex scam!
Financial market!
FOREX 101!
Exchange rate!
Exchange rate regime!
Fixed exchange rate!
Futures exchange!
Products
Currency!
Currency future!
G7 will discuss Japanese Yen
The G7 nations have decided to make a late addition to the agenda for their meeting in Singapore later this month: the weakness of the Japanese Yen. The Yen managed to stay below the radar for years, but due to growing trade imbalances, leaders from other industrialized nations have begun to complain that Japan’s Central Bank is artificially depressing the Yen to give Japanese exporters an unfair advantage. Especially now that Japan’s economy seems to have definitely emerged from its recessionary and deflationary period, it no longer requires a cheap Yen. This development could have important ramifications in forex markets, if G7 leaders decide to sanction Japan. Forbes reports:
“The G7 is no longer willing to allow the yen weakness to continue as Japan does not require a weak currency given the growth/inflation outlook.”
Read More: Yen surges on confirmation G7 will discuss currency
LONDON (AFX) - The yen surged across the board after Germany's deputy finance minister confirmed that the G7 group of leading industrialised nations will discuss the recent weakness of the Japanese currency at its upcoming meeting in Singapore.
In comments to reporters in Berlin, Thomas Mirow said it has become an 'source of concern' that the euro has hit record highs against the yen almost on a daily basis. As a result, European ministers would like to talk about it, he added.
'Comments from the German deputy finance minister have finally put the September G7/IMF meetings into the spotlight and instead of the (Chinese) yuan, the yen has become a focal point for policy makers,' said Divyang Shah, global strategist at IDEAglobal.com. 'The G7 is no longer willing to allow the yen weakness to continue as Japan does not require a weak currency given the growth/inflation outlook and quantitative easing/zero interest rate policy have been replaced with more normal monetary policy,' he added.
The yen has slid against both the dollar and the euro as investors reined back their expectations of aggressive monetary tightening from the Bank of Japan, following its first hike in six years in July.
In contrast to expectations earlier in the year, the BoJ is set to keep borrowing costs unchanged tomorrow.
Daniel Katzive, currency strategist at UBS, thinks the yen may enjoy a recovery over the coming days and weeks.
'We continue to view upcoming G7 risk, a retreat in risk appetite back towards more moderate levels, and potential for more hawkish BoJ commentary as likely to keep yen-funded carry trades nervous, and see scope for some further yen recovery at the expense of higher yielding currencies in the near-term,' he said.
Elsewhere, the pound remained on the backfoot for the second day running as the pressure on Prime Minister Tony Blair to resign mounts.
Following yesterday's seven resignations from the government, Blair is today set to front up to his critics and outline his plans for leaving office.
Many commentators doubt that the expected confirmation that he will leave office by the time of the Labour Party conference in autumn 2007 will be enough to placate his opponents.
Over the course of the last couple of days, the pound has slumped from 1.90 usd, while the euro has climbed above 0.68 stg.
Simon Derrick, currency strategist at Bear Stearns, said sterling's reaction has been 'odd' as most pundits had been anticipating Blair's departure in May next year. Given its yield support, he anticipates the current pressure on sterling to be short-lived.
'In other words, while there are things that could dent the pound's attractiveness, there seems little reason to view the current political situation as being one of them,' he said.
Meanwhile, the dollar was solid after yesterday's publication of the Beige Book into US economic activity from the US Federal Reserve and new data into US labour costs. The Fed revealed that economic activity in the world's largest economy continues to expand though growth in many regions was slowing down.
However, the possibility of another rate hike has not been completely discounted, analysts said, especially as a US government report showed second quarter unit labour costs up to 4.9 pct, compared with an initial reading of 4.2 pct.
'Some firmer headline data and a small rebound in US short-end yields seems to have been sufficient to keep the dollar afloat so far this week,' said UBS's Katzive.
At the moment most analysts expect the Fed to keep policy unchanged over the months ahead. The central bank kept its key Fed funds rate on hold on Aug 8 at 5.25 pct after 17 consecutive quarter-point increases.
In contrast to the Fed, most expect the European Central Bank to lift borrowing costs in both October and December.
The ECB has raised its benchmark 'refi' refinancing rate four times since December, each time by a quarter of a percentage point. The refi currently stands at 3.00 pct.
As a result, most analysts said the expected narrowing of yield differentials between the US and the euro zone is likely to put the dollar under pressure. London 1147 GMT London 0905 GMT
US dollar
yen 116.17 down from 117.00
sfr 1.2426 up from 1.2362
Euro
usd 1.2740 down from 1.2793 stg 0.6791 down from 0.6795
yen 148.04 down from 149.72
sfr 1.5827 up from 1.5816
Sterling
usd 1.8758 down from 1.8826
yen 217.92 down from 220.32
sfr 2.3312 up from 2.3276
Australian dollar
usd 0.7626 down from 0.7630
stg 0.4065 up from 0.4052
yen 88.60 down from 89.30
pan.pylas@afxnews.com
pp/gp/pp/joy
http://www.forbes.com
Yến !Huyền !Loan !Thanh !Thuý !Lan !Linh !Hiền !