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Things heating up over yen appreciation

September 28, 2009
By Ken Worsley


When Peter Schiff recently said that Japanese policymakers were embracing a “strong yen” policy, one of my eyebrows raised a bit. Although Finance Minister Hirohisa Fujii has made it clear that he does not support currency intervention, I don’t remember hearing anything about a “strong yen” policy. As the Nikkei puts it:

During his bilateral talks with U.S. Treasury Secretary Timothy Geithner in Pittsburgh last week, Fujii said Japan would ”in principle” not intervene in the currency market.

”There is a sense of security in yen buying,” said Koji Fukaya, senior currency strategist at Deutsche Securities Inc. ”His remarks were perceived (by the market) as (Japan) accepting a strong yen,” he said.

Now Bloomberg is reporting Fujii’s contention that his statements were misconstrued:

Japanese Finance Minister Hirohisa Fujii said people are wrong to think that he’s in favor of a stronger yen…Since coming to office this month, he has said he doesn’t support a “weak yen” and questioned “the idea of easy intervention,” spurring speculation the government won’t step into the currency market.

This should be an interesting week to watch the yen. As September draws to a close, expect many exporters to repatriate funds held overseas due to changes in accounting laws made this past April. At some point this speculative yen rally will come to an end; After all, what are the true incentives to buying yen?

Filed Under Exchange Rates, Finance 

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Comments

3 Responses to “Things heating up over yen appreciation”

  1. Patomaru on September 28th, 2009 5:53 pm

    So are you saying I shouldn’t wait to send money home to the states?

  2. Matt at AnarchyJapan on September 28th, 2009 8:40 pm

    Regarding Fujii’s comments, all I have to say is that certainly didn’t take long. i thought he’d hold out at least until the end of the week or so … sigh.

    As far as not supporting a weak yen doesn’t mean supporting a strong yen, I have a question for you, how many angels can dance on the head of a pin?

    As far as Schiff, he always shoots from the hip and now and then misses small details, but I think he gets a lot right in the broader picture. It’s nice to have someone out there willing to make such broad strokes and take such big chances with their opinions. In a few years, he’ll be looking really smart or really dumb.

    Finally, you asked, “what are the true incentives to buying yen?” The answer, my unyielding optimism as a resident of Japan who earns his keep in yen. ;-)

  3. Ken Worsley on September 29th, 2009 12:38 am

    Matt,

    I like the top answer here: http://www.answerbag.com/q_view/35011

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