Perfect timing. But the method lacks professionalism. The first disturbing mark sent by new prime minister Kan entering into actions at last on yen versus the other currencies. Japan has not even warn the Europeans, much less the United States, about its plans to intervene on the currency via the BoJ. And the surprise caught a lot when Japanese government announced yesterday the central bank is to act intermittently on the foreign exchange market intervention to rectify the yen's sharp appreciation versus Euro and Dollar. Rather than cooperation with the West, Japan went alone... Japan's intervention is a first since March 06, 2004.
"Instead of buying dollars, China buys yen, which in turn induces Japan to buy dollars. This maintains the artificial capital flows to the U.S. while allowing China to escape accusations of being a “currency manipulator." a blogger says.
Adding an other scoop : "Sooner or later this must become intolerable to the U.S. administration, which is sailing into an election with high unemployment and a low approval rating. It should come as little surprise that the United States moved on Wednesday to bring two new cases against China before the World Trade Organization, one on steel and the other in banking."
As a result, the yen-euro ended 110 and 85 for the yen dollar exchange rate. Rapid gains in the Tokyo stock market Nikkei index recovered to 9,500 yen for the first time in nearly a month with a +2.3 % up. Large-scale intervention is likely to exceed amounts in trillion of yen for the days, sources say... and they add: "Pessimism remains regarding the weakness of US economy."
Sources: Reporter's Notes