Currency Intervention Madness; Japan Intervenes to Weaken the Yen; Selected Quotes

Currency Intervention Madness; Japan Intervenes to Weaken the Yen; Selected Quotes

Courtesy of Mish 

After months of attempting to talk the Yen down, Japan Intervenes First Time Since ’04 to Rein in Yen.

Japan intervened in the foreign-exchange market for the first time since 2004 after a surge in the yen to the strongest against the dollar in 15 years threatened to stunt the nation’s economic recovery.

Finance Minister Yoshihiko Noda confirmed the intervention, speaking to reporters today in Tokyo. He said Japan contacted other nations about the step, without specifying that today’s measure was taken unilaterally. Chief Cabinet SecretaryYoshito Sengoku said the ministry considers 82 per dollar to be the line of defense, after it reached a high of 82.88 earlier today.

Japan hadn’t intervened to sell yen in the foreign-exchange market since 2004, when the yen was around 109 per dollar. The Bank of Japan, acting on behest of the Ministry of Finance, sold 14.8 trillion yen in the first three months of 2004, after record sales of 20.4 trillion yen in 2003. Noda didn’t say how much was used in today’s action, while that figure will be released at a later date.

U.S. Treasury Secretary Timothy F. Geithner declined to comment about the prospects for currency intervention in an interview last week, instead saying that Japanese officials should do what they can to help their economy grow.

Recent Japanese data have pointed to the expansion losing momentum. The government yesterday revised its July industrial output figures to show that output fell rather than increased from a month earlier. Japan’s economy expanded at a 1.5 percent annual rate in the second quarter, less than half the pace of the previous period, and consumer confidence slid to a four-month low in August.

Is Currency Manipulation OK or Not?

Both China and Japan are intervening in the Forex markets for the same reason, to strengthen exports and stimulate the economy.

Pardon me for asking the obvious question but it needs to be asked: Why does Geithner give the green light for Japan to intervene in the currency markets but China is threatened with a currency manipulator label for doing the same thing?

Boosting the Dollar

Please consider a few select quotes from the New York Times article Japan Moves to Boost the Dollar

JOHN VAIL, CHIEF GLOBAL STRATEGIST, NIKKO ASSET MANAGEMENT

“Clearly the U.S. is not going to be too friendly towards it although they may not argue too much about it in that Japan is…

Read the original story at Phil’s Stock World