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Thursday, July 16, 2009

Forex : Japan opposition cautiously forex intervention

Forex money - Japan should not intervene in the forex currency markets unless exchange rates fluctuate abnormally, a senior opposition lawmaker said Thursday when asked about the recent strength of the yen against the dollar.

The main opposition Democratic Party has its best chance to win Prime Minister Taro Aso's ruling Liberal Democratic Party (LDP) and its smaller coalition partner in an imminent national election, ending half a century of almost uninterrupted by the conservative LDP .

"forex Currency rates should not be moved artificially, as they reflect the strength of the economy. If Japan's economy is strong, so is the yen and weaker than if the U.S. economy, the dollar will strengthen . It is very natural, "Hirohisa Fujii, a senior adviser to the Democrats, told Reuters in an interview.

"Unless the forex currency moves are abnormal, I do not think we should intervene in forex currency markets."

Fujii, 77-year-old former finance ministry official, is seen by political analysts and party members from running for a key position in economic policy if the Democrats win the elections to be held in October.

He served as finance minister in an anti-LDP coalition, from 1993 to 1994.

It is not clear that a government of the Democratic Party to be appointed as finance minister. Masaharu Nakagawa, the finance spokesman for the party, Fujii and touted as potential candidates, but analysts say that the post could go to other veterans.

Japan has a long history of trying to stop the intervention by the yen to buy dollars, but has remained outside the market from 35 trillion yen ($ 373 billion) a year over 15 months ending March 2004 .

The yen touched a maximum of five months of 91.80 yen per dollar last week, raising concern about the impact on Japan, which depend on the export economy as it emerges from its deepest recession since the Second World War.

Fujii also said that Democrats see no need to change in Japan's $ 1 trillion dollars of foreign exchange reserves, second largest in the world after China.

"It is a fact that confidence in the dollar remains high and is very natural for Japan to manage its reserves which it is hoped the majority of (the markets)," he said.

"The same applies to the currencies and stocks, and we must acknowledge as a fact in a free market economy."

Fujii shrugged the comments made by Nakagawa said that Japan should avoid the purchase of forex dollar-denominated U.S. bonds because of forex currency risk.

"About 60-70 percent of the way it is implemented should not be changed, this is a condition for a change of government. If it has changed 100 percent, which would be a revolution," said Fujii.

"The weight of the dollar in reserves is one of those topics that should not be changed only by a change of government happens."

He also said that the Democrats what they consider to cut wasteful spending in Tokyo from $ 160 billion stimulus measures, which he said includes expenditures such as construction projects, to reduce new bond issues totaling a record 44.1 trillion yen in the fiscal year that began April 1.

"The supplementary budget (for the current fiscal year to next March) is a fake," said Fujii. "It is important to reduce more than 10 percent of new government bond issues. This is important both for the fiscal health of Japan and JGB markets." ($ 1 = 93.74 Yen) - Reuters - Forex money

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Friday, May 1, 2009

U.S. dollar, yen slide as risk appetite rises

NEW YORK, May 1 (Reuters) - The U.S. dollar and yen fell on Friday as increasing risk appetite sparked by better-than-expected U.S. economic data pared demand for both currencies as a refuge against the global slowdown. The dollar fell for a fourth straight session versus the euro, while the yen dropped to a two-week low against both the euro and dollar, with volumes thin given the May Day holiday in Europe. Higher-yielding currencies such as the Australian and New Zealand dollars were some of the biggest movers on the day, moving in tandem with higher U.S. stocks.

New data on Friday reinforced the view that the worst of the recession may have passed, making investors more comfortable with risk-taking. Reports showed U.S. consumers felt more upbeat about the economy in April while a key gauge of manufacturing suggested the sector was gradually emerging out of a prolonged recession. The numbers were consistent with the Federal Reserve's less bleak outlook on the U.S. economy issued on Wednesday.

"Risk appetite is definitely coming back and the data this morning was phenomenal," said Melvin Harris, a market analyst at Advanced Currency Markets in New York.

"The reports are supportive factors to truly build the case that while things are not completely better yet, we are moving in a positive direction. Economic fundamentals will become more important in the next couple of months."

In late afternoon trading, the euro rose 0.3 percent against the dollar to $1.3262 and touched a two-week high against the yen at 132.33 yen . The euro last traded at 131.64, up 1.0 percent from late on Thursday.

On the week, the euro was up 2.8 percent versus the yen.

The ICE Futures' dollar index, a measure of the greenback's value versus six major currencies, fell 0.3 percent to 84.569 .DXY.


The dollar, however, gained 0.7 percent against the yen to 99.28 , having hit a two-week high around 99.58 yen, according to Reuters data.

The Australian dollar rose 0.7 percent against the U.S. dollar to US$0.7299 . The New Zealand dollar also climbed, up 0.8 percent against the greenback to US$0.5697 , while the Canadian dollar was also firmer, with the U.S. dollar down 0.7 percent at C$1.1849 .

Investors were also encouraged by data overnight showing Chinese manufacturing gained further momentum in April, as well as by Friday's better-than-expected UK manufacturing survey.

Optimism was further stoked in the United States after St. Louis Fed President James Bullard said on Friday the U.S. unemployment rate will likely crest above 9 percent but not reach levels set in the early 1980s.

Still investors remained cautious as the financial markets remain in an uncertain environment. Next week's announcement of the outcome of U.S. stress tests on top banks is an unknown.

Results from tests of the health of the 19 largest U.S. banks are expected Thursday, May 7, and will include information on estimates of losses for certain categories of loans and resources to absorb those losses. [ID:nWAT011386]

Sentiment also remains vulnerable to any hint on whether a spreading flu outbreak may turn into a pandemic that would be severe enough to dent global economic recovery.

Investors will also be looking to next week's U.S. nonfarm payrolls report for April, another potential risk for the markets. Analysts are expecting job losses of 630,000 last month, according to a Reuters poll.

"Although the pace of U.S. economic decline should be considerably less severe in the second quarter, the best contemporary tracking measures still point to a decline," said Avery Shenfeld, senior economist at CIBC in Toronto.

"How hard can we cheer about a more cushioned fall when another 600,000 drop in non-farm payrolls shows up in Friday's report?"

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