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manishdave
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   Posted: 07/Mar/2008 at 6:06am |
I heard they are oiling the press right now so it can run fast. They will need at least reliable press if not Fed. They don't have choice and they are going to do it. They will inflate away their debt. Tax rebate to "everybody" when u have record deficit and you are going from good economy to recession. Is it not helicopter money?
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BubbleVision
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Posted: 10/Mar/2008 at 5:10pm |
March 10 (Bloomberg) -- For the first time in more than a decade, foreign exchange traders are confident that the Bank of Japan won't intervene in the currency market, paving the way for the yen to extend its biggest rally since 2000.
Japanese authorities sold the currency on all four occasions since 1995 when the yen approached the 100 mark in a bid to support exporters from Toyota Motor Corp. to Sony Corp. When the yen strengthened to a eight-year high of 101.43 last week, Finance Minister Fukushiro Nukaga stopped short of signaling that officials are concerned, only saying the government needs to watch currency moves “carefully.''
An attempt to influence exchange rates would bring Japan into conflict with the U.S., which relies on a weak dollar to underpin an economy on the verge of a recession. Citigroup Inc. and Royal Bank of Scotland Group Plc, the third- and fourth- biggest traders, say Nukaga will let the yen break 100 because it's 40 percent weaker than its peak in 1995 on a trade-weighted basis.
”When I intervened, the U.S. agreed to it,'' said Eisuke Sakakibara, dubbed ``Mr. Yen'' for his ability to influence the foreign exchange market as Japan's top currency official from 1997 to 1999. “The U.S. now welcomes a gradual decline in the dollar and Treasury takes the position of Detroit. This is affecting how Japan is responding now.''
Japan increasingly relies on Asia for growth, making the country less sensitive to a U.S. slowdown. Shipments to the U.S. accounted for about 20 percent of exports last year, down from about 30 percent in 2000. Asia consumes half of Japan's exports.
Tables Turned
Japan's economy, the world's second largest, may expand 1.5 percent this year, matching the growth rate in the U.S., the International Monetary Fund said on Jan. 29. It would be the first time Japan won't lag behind the U.S. since 1991.
”Compared to the U.S., growth in Japan is relatively robust,'' Sakakibara said. “The tables have turned.''
U.S. officials probably won't support dollar purchases unless the yen breaks 90 and heads toward 80, said Sakakibara. Central banks intervene in the foreign exchange market when they buy or sell currencies to influence exchange rates.
The yen gained 0.4 percent to 102.24 at 12:51 a.m in Tokyo. Naoyuki Shinohara, currently Japan's top currency official, told reporters today he's “carefully'' watching the market, reiterating Nukaga's comments.
The yen has gained 19 percent since June, the second biggest advance among the 16 major currencies behind the Swiss franc. Rather than a referendum on the economy, the rally was fueled by losses in the credit markets, which led investors to sell high-yielding assets around the world financed with cheap loans in Japan. They would need to buy yen to pay back the loans.
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On My God!!!
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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kulman
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Posted: 10/Mar/2008 at 5:27pm |
Originally posted by BubbleVision
.... which led investors to sell high-yielding assets around the world financed with cheap loans in Japan. They would need to buy yen to pay back the loans.
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BubbleVision....
I recall that there was a talk of this issue few months ago. Some large Indian corporates have taken loan in Yen & that breakeven rate for them is some 98 or something.
So if Yen becomes stronger than 98, it might open another pandora's box.
Aaj kal jab bhagwan bad news deta hain toh chhappar phad ke deta hain!
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Life can only be understood backwards—but it must be lived forwards
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nitin_jagtap
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Posted: 10/Mar/2008 at 5:27pm |
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Bubbleji .....Will it be a war of the central banks at the 100 level ?
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Warm REgards
Nitin Jagtap
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BubbleVision
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Posted: 10/Mar/2008 at 5:33pm |
Originally posted by nitin_jagtap
Bubbleji .....Will it be a war of the central banks at the 100 level ? |
Don’t Hope so!!!
I would like a one off large single swoop!
BTW, Central banks dont "War". The "have joint intervention". However, the US Treasury has NOT interviened in FX since 1995 and Dollar is the Job of US Treasury and NOT the Fed. BOJ last interviened in 2004, and ECB interviened in 2000.
The 1995 $-Y was the largest intervention and the most impactful, when BOJ and Fed sold Yen and purchased USD.
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You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer!
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BubbleVision
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Posted: 10/Mar/2008 at 5:41pm |
Originally posted by kulman
BubbleVision....
I recall that there was a talk of this issue few months ago. Some large Indian corporates have taken loan in Yen & that breakeven rate for them is some 98 or something.
So if Yen becomes stronger than 98, it might open another pandora's box.
Aaj kal jab bhagwan bad news deta hain toh chhappar phad ke deta hain!
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Kulman…There is “stop loss and knockout city” below 100. There are all kinds of option structures globally.
This is at least 5 times bigger than that USD-CHF level of 1.1000.
Edited by BubbleVision - 10/Mar/2008 at 5:47pm
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kulman
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Posted: 10/Mar/2008 at 5:45pm |
Originally posted by BubbleVision
…There is “stop loss and knockout city” below 100. There are all kinds of option structures globally.
This is at least 5 times bigger than that USD-CHF level of 1.1000.
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Hmmm....so another black swan?
Can you please however elaborate on “stop loss and knockout city” in few lines & laymen lingo?
Edited by kulman - 10/Mar/2008 at 5:46pm
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BubbleVision
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Posted: 10/Mar/2008 at 5:51pm |
Originally posted by kulman
Hmmm....so another black swan?
Can you please however elaborate on “stop loss and knockout city” in few lines & laymen lingo?
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Knockout levels are levels which when traded results in the option being redundant. This means that the hedgeing goes kaput.
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