----- Original Message ----- From: "Tom Walker" <timework at telus.net>
I hate to do this because it'll just inspire a correction but when I checked the forex markets a few minutes ago the Euro was over 1.33, the Loonie was at 85 cents (yippee!) and the dollar was only buying 102.25 yen. Then I spied this little item. Now to sustain the US current account deficit, China needs to be _buying_ dollar assets, right? Well, would you?
China cutting dollar assets in forex stash -paper Fri Nov 26, 2004 12:50 AM ET
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Not to bring this to an issue of methodological individualism, but *who* is China's 'equivalent' of Eisuke Sakakibara [Mr. Yen]?
[from the good 'ol days]
http://archives.cnn.com/2002/BUSINESS/asia/01/10/japan.yen/ 'Mr. Yen' says it may drop to 160 to dollar
January 10, 2002 Posted: 4:55 AM EST (0955 GMT)
TOKYO, Japan -- The yen may weaken to 160 to the dollar near the end of 2002, Eisuke Sakakibara predicts.
Sakakibara, who earned the moniker "Mr. Yen" while serving as Japan's top financial diplomat, says that would reflect the country's poor economic fundamentals
"Japanese economic fundamentals are extremely weak now," Sakakibara, now a professor at Keio University in Tokyo, told Reuters on Thursday. "I wouldn't be surprised to see the yen fall to 150-160 per dollar towards the year-end."
The yen has already fallen 10 percent against the dollar over the past two months.
The dollar stood at 132.22 in late Hong Kong trade on Thursday, after touching a three-year weak level of 133.37 on Wednesday.
Remarks carry weight
Formerly vice finance minister for international affairs, Sakakibara gave up responsibility for currencies at the Japan's ministry of finance in 1999.
However, his remarks still carry weight in the currency markets, where he is reckoned to have some influence over the administration.
When asked about prospects towards the fiscal year book-closing at the end of March, Sakakibara said there was a slim chance that the dollar would fall back below 130 yen.
However, he said, "If repatriation flows were to pressure the yen higher, institutional investors and individuals would be likely to buy (the dollar)." Yen 140 more appropriate
Sakakibara feels the yen was likely to depreciate to the 135-140 level towards March 31.
But he said the Japanese monetary authorities might consider intervening if the yen fell below 140 per dollar.
"At least between 130 to 140, I don't think they'll intervene," he said. "If it starts to depreciate [past] 140 then they might consider intervening either verbally or physically, but I don't think they should do it."
Asked how he would assess the views of Japanese monetary officials on the yen, Sakakibara said their fundamentals are quite weak.
"I talk with them quite often," he said. "Their fundamental position, including the Bank of Japan, is that the fundamentals are weak and their currency is reflecting the fundamentals." U.S. accepting weaker currency
Sakakibara said he thought the U.S. seemed to accept the weakening yen, given Japan's extremely poor economic fundamentals.
He also advised the Bank of Japan to continue its easy monetary policy stance, including more outright purchases of Japanese government bonds, or JGBs.
But he noted that monetary and fiscal policy could have only limited effect on the economy under current circumstances, and that structural reform was key for economic revival.
Sakakibara also said that more government spending would not be an effective way of helping the country's ailing economy and could lead to a collapse in the JGB market. Asian currencies
Asked about a rising tide of complaints from Asian nations about the weaker yen, Sakakibara said Asian currencies should gradually weaken against the dollar, along with the yen.
He said Japan and Asian nations should cooperate on currency policies.
Both China and South Korea have made their displeasure with the yen's fall clear in recent days, hinting that further weakness could trigger the kind of regional currency devaluations seen during the 1997 Asian crisis.
Sakakibara expects that some sort of adjustment would be necessary for currencies that are pegged to the dollar, such as the Hong Kong dollar and Malaysian ringgit.
"In the medium- to long-term, I am thinking about some kind of currency union among Asian countries," he said.