“The yen’s excessive weakness could lead to instability”
The chairman of the Japan Chamber of Commerce and Industry, Nobuo Yamaguchi, yesterday recommended “yen-buying intervention by the Ministry of Finance” to stop the yen’s slide against virtually all other currencies.
Japanese corporations are not normally a hotbed of activism in terms of boosting the yen.
While a lot of people are unhappy with the Bank of Japan’s inability to take the initiative on monetary policy, the spending-addicted Japanese political establishment doesn’t want to hear anything about increasing interest rates, which will cause severe short- (and maybe medium-) term pain for the Japanese economy.
The Japanese parliament extended its current session by a week, which thus pushes back Upper House elections by a week as well. Which, coincidentally, is the last day of the Bank of Japan’s July deliberations, and since Fukui has promised no interest rate hikes until after the July elections, that pushes back interest rate hikes until August.
(Thanks to the Japan Economy News blog for the pointer.)
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Posted: June 21st, 2007 under Asia, Currency, Foreign Exchange, General.
Comments: 2
Comments
Comment from Ken
Time: June 21, 2007, 12:16 pm
Thanks for the mention! One small thing: Fukui hasn’t publicly promised not to raise rates in July. That would interfere with the BOJ’s ‘independence’, right?
Comment from Ken
Time: June 21, 2007, 12:19 pm
Sorry, one last thing: The last day of the BOJ’s July meeting (the 12th) is the first day of campaigning for the Upper House election (on the 29th). Political campaigns can only happen during a set time period before an election, and no TV ads for individual candidates may be run during time, and they are not allowed to update their websites during that time.
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