Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Because Japan is holding a Trillion Dollar? Although granted Japan's reserves did not grow particularily fast last year so Japan's currency manipulation may well be a thing of the past.

And then there is this:
How Japan financed global reflation

In 2003 and the first quarter of 2004, Japan carried out a remarkable experiment in monetary policy ? remarkable in the impact it had on the global economy and equally remarkable in that it went almost entirely unnoticed in the financial press. Over those 15 months, monetary authorities in Japan created ¥35 trillion.

[...]

The Bank of Japan gave the ¥35 trillion to the Japanese Ministry of Finance in exchange for MOF debt with virtually no yield; and the MOF used the money to buy approximately $320 billion from the private sector. The MOF then invested those dollars into US dollar- denominated debt instruments such as government bonds and agency debt in order to earn a return.

by generic on Thu May 29th, 2008 at 02:08:02 AM EST
[ Parent ]
But in 2007, the Yen was over purchasing power parity, so the idea that the Japanese are deliberately discounting their currency against both the US$ and Euro doesn't stand up to scrutiny.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Thu May 29th, 2008 at 07:00:21 AM EST
[ Parent ]
I agree, but at least discounting the Yen against the $ is not unprecedented.
by generic on Thu May 29th, 2008 at 03:56:28 PM EST
[ Parent ]
Yes, certainly at one time the Japanese pursued a discounted FXR policy ... but that was years back.

Of course when the Japanese adopted a full accommodation monetary policy stance in the 90's, that resulted in a lower Yen (indirect) FXR, but that the way floating exchange rates are expected to work when a country has a sluggish economy and adopts a loose monetary policy.

Mind you, Japanese corporations went through a structural transition in the imported/domestic composition of their exports during the 1990's ... a major factor in the sluggish domestic economy in the 1990's ... so I guess someone could argue that they are embedding the neo-mercantalist monetary policy embedded in the Chinese and Southeast Asian into their exports via the imported component of their exports.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Thu May 29th, 2008 at 06:56:00 PM EST
[ Parent ]
But the Japanese are much more flexible than their regional competitors for the simple reason that they own and co-own manufacturing facilities within many of their largest trading partners - the U.S. in particular. Taiwan has some similar endeavors, but nothing on the scale of the Japanese penetration.

Upshot is that they can - and do, as I can state from personal experience - make manufacturing/import/export decisions based on their analysis of the mid-term, relative financial trends between their domestic economies and those of their 'clients'.

paul spencer

by paul spencer (spencerinthegorge AT yahoo DOT com) on Fri May 30th, 2008 at 02:23:39 AM EST
[ Parent ]
The infamous Yen carry trade?

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu May 29th, 2008 at 03:21:56 PM EST
[ Parent ]

Display:

Occasional Series