Japan intervenes to lower yen, is that currency manipulation?

Japan silent on intervention talk after yen's drop

By TOMOKO A. HOSAKA
Associated Press Writer

Published: Friday, September 24, 2010 at 5:51 a.m.
Last Modified: Friday, September 24, 2010 at 5:51 a.m.

TOKYO -Japanese authorities were silent after a sudden jump in the dollar against the yen Friday that traders initially said was due to the Bank of Japan intervening to weaken the Japanese currency.


In early afternoon trading in Tokyo, the dollar jumped suddenly from the mid-84 yen level to as high as 85.38 yen before slipping back to 84.68 yen, prompting traders to say the central bank had bought dollars to weaken the yen.

But no official confirmed the action in the subsequent hours. The Bank of Japan, finance ministry and Cabinet all said they could not comment a departure from last week when Japan intervened in currency markets for the first time in six years.

On Sept. 15, monetary authorities likely spent between 1.76 trillion yen ($20.7 billion) and 1.86 trillion yen ($21.9 billion) to buy the dollar, according to central bank figures. At the time, Finance Minister Yoshihiko Noda openly discussed intervention at a press conference, touting the government's resolve to fight the strong yen. The central bank released an accompanying statement.

The move followed the dollar's drop to a 15-year low of 82.87 yen, which led business leaders to press the government for intervention. A strong yen batters Japan's vital car and electronics exporters by making their products less competitive in world markets and eroding the value of profits brought back from overseas.

Prime Minister Naoto Kan, who met with President Barack Obama in New York on Thursday, said last week that Japan would "continue to take decisive action if needed" to keep the yen from appreciating.

It remains unclear whether that action happened today

Oh I forgot, only one country not allowed, the rest are OK.

my bad.

You are mistaken. The definition of currency manipulator is in the hand of America. Therefore as long as America is find with Japanese invention then it is OK. Contrary, If America decided Japan is a currency manipulator, then Japan would be condemned such as two decades ago.

The main issue at hand is not so much Japan's intervention but China's. If a member of the G8 takes measures to makes their own currency lower, than it makes it harder for the US to condemn China on its Renminbi's being artificially lower.

The timing for Japan is certainly fortuitous, as the US is hardly likely to shout Currency Manipulator at the same time that they have been standing firm beside then in support of a maritime dispute in the East China Sea that mysteriously and for no good reason blew up on account of Japanese action, right out of the blue!

Some affected Asians' currencies are still much undervalued, compared to that before the Asian financial crisis. So, if they really insist on this theory of currency manipulation, who were the original currencies manipulator then? At least now we are seeing a gradual increase in the value, as opposed to during the crisis where we really saw evidence of manipulation causing the currencies to plunge. I find it amazing that people forget so easily that these original currency manipulators are the ones who made some Asian currencies undervalued in the first place. Maybe it's because people have short memory because subconciously they are afraid to point fingers at themselves.

antimatter said:

Oh I forgot, only one country not allowed, the rest are OK.

my bad.

Click to expand...

You're comparing apples with oranges. China's currency is mostly fixed, even if there is some leeway for movement. Japan's generally floats, but for some months has been abnormally high.

Whereas China could allow its currency to appreciate more without hurting its economy (and it could be beneficial by making it more profitable to invest overseas), Japan's exports are in danger of being severely hurt by the current high exchange rate. Any action that might taken by Japan would be temporary. In contrast, China's current stance is effectively a permanent means of keeping the yuan's value low.

Mr T said:

You're comparing apples with oranges. China's currency is mostly fixed, even if there is some leeway for movement. Japan's generally floats, but for some months has been abnormally high.

Whereas China could allow its currency to appreciate more without hurting its economy (and it could be beneficial by making it more profitable to invest overseas), Japan's exports are in danger of being severely hurt by the current high exchange rate. Any action that might taken by Japan would be temporary. In contrast, China's current stance is effectively a permanent means of keeping the yuan's value low.

Click to expand...

Cant argue with that. Some Us ecnomists and Senators think that China's currency is still under valued by about 40%

Mr T said:

You're comparing apples with oranges. China's currency is mostly fixed, even if there is some leeway for movement. Japan's generally floats, but for some months has been abnormally high.

Whereas China could allow its currency to appreciate more without hurting its economy (and it could be beneficial by making it more profitable to invest overseas), Japan's exports are in danger of being severely hurt by the current high exchange rate. Any action that might taken by Japan would be temporary. In contrast, China's current stance is effectively a permanent means of keeping the yuan's value low.

Click to expand...

That is not the case in the 90 and early 00. Japan was labeled as currency manipulator even though its currency was also generally regarded as floated. As I remember, Japan's intervention was strongly criticized. I don't want to say this implies hypocrisy or double standard, but at the very least the west is inconsistency of its own policy and only apply its rules when it is convenient for them.

Generally, I agree that China should allow its currency to appreciate gradually. Some where within 5-6% a year should be manageable. However, China's currency has already appreciated about 21%. That is a fact and should be reminded. However, some politicians are still demanding another 45%. In the end of the day, this is just politics. I doubt China could ever satisfy you or any of these senators' endless demands.