The US government has made a "major change" in its foreign-exchange policy that will keep the greenback in a range of between ¥100 and ¥110, said Eisuke Sakakibara, Japan’s former top currency policy official.
“It was a major change in US foreign-exchange policy,” Sakakibara said in an interview with Bloomberg Television yesterday in Tokyo. “There has been a shift of their position because of inflation. They are now talking about intervention.”
US Treasury Secretary Henry Paulson said this month he would “never take intervention off the table” and Federal Reserve Governor Ben Bernanke said he was “attentive” to the dollar’s slump.
Group of Eight officials said at a summit over the weekend that a stronger US currency would help curb oil prices and inflation.
Sakakibara, who correctly forecast in an interview in October that the dollar would plunge, said in March that a US recession could push the yen as high as ¥80 or ¥90 in the next two years.
A professor at Waseda University in Tokyo, Sakakibara was dubbed “Mr Yen” due to his ability to influence the foreign-exchange market during his 1997-1999 tenure at the finance ministry.
Sakakibara said there was a “very small” chance that Japan would agree to joint intervention to limit the euro’s gains against the yen. He said it was unlikely policymakers would buy dollars with yen.
The yen fell to ¥108.40, the lowest level since Feb. 14, before trading at ¥108.24 at 11:25am in Tokyo from ¥108.19 late in New York on Friday. Japan’s currency declined to ¥166.74 against the euro from ¥166.35. The dollar traded at US$1.5405 per euro from US$1.5380. It earlier fell to US$1.5450 per euro.
“A strong dollar is in our nation’s interest,” Paulson told reporters after the G-8 meeting. French Finance Minister Christine Lagarde said she was “happy to hear Paulson clearly say how much the strong dollar policy is indispensable.” Canadian Finance Minister Jim Flaherty and Russian Finance Minister Alexei Kudrin said a stronger dollar would reduce oil prices.
The world economy faces “headwinds” from rising fuel and food costs, G-8 ministers said in Osaka, Japan, in a statement on Saturday that didn’t mention foreign exchange.
“The world economy continues to face uncertainty and downside risks persist,” G-8 officials said in a statement. “Elevated commodity prices, especially of oil and food, pose a serious challenge.”
The G-8, which includes the US, Japan, Russia, Germany, France, the UK, Italy and Canada, stuck to its practice of not making a joint comment on currencies when central bankers are absent.
The price of oil reached an unprecedented US$139.12 a barrel last week and food costs from rice to soybeans have risen to record highs this year.
The dollar has fallen against 11 of the 16 most active currencies this year as oil rose to a record. The US currency’s correlation with oil prices against the euro was minus 0.93 for the past year, according to Bloomberg calculations based on value changes. This means the two move in the opposite direction 93 percent of the time.
Sakakibara is on the Asia-Pacific advisory board of Bloomberg LP, parent of Bloomberg News.
WEAKER ACTIVITY: The sharpest deterioration was seen in the electronics and optical components sector, with the production index falling 13.2 points to 44.5 Taiwan’s manufacturing sector last month contracted for a second consecutive month, with the purchasing managers’ index (PMI) slipping to 48, reflecting ongoing caution over trade uncertainties, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The decline reflects growing caution among companies amid uncertainty surrounding US tariffs, semiconductor duties and automotive import levies, and it is also likely linked to fading front-loading activity, CIER president Lien Hsien-ming (連賢明) said. “Some clients have started shifting orders to Southeast Asian countries where tariff regimes are already clear,” Lien told a news conference. Firms across the supply chain are also lowering stock levels to mitigate
Six Taiwanese companies, including contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), made the 2025 Fortune Global 500 list of the world’s largest firms by revenue. In a report published by New York-based Fortune magazine on Tuesday, Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), ranked highest among Taiwanese firms, placing 28th with revenue of US$213.69 billion. Up 60 spots from last year, TSMC rose to No. 126 with US$90.16 billion in revenue, followed by Quanta Computer Inc (廣達) at 348th, Pegatron Corp (和碩) at 461st, CPC Corp, Taiwan (台灣中油) at 494th and Wistron Corp (緯創) at
NEGOTIATIONS: Semiconductors play an outsized role in Taiwan’s industrial and economic development and are a major driver of the Taiwan-US trade imbalance With US President Donald Trump threatening to impose tariffs on semiconductors, Taiwan is expected to face a significant challenge, as information and communications technology (ICT) products account for more than 70 percent of its exports to the US, Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) president Lien Hsien-ming (連賢明) said on Friday. Compared with other countries, semiconductors play a disproportionately large role in Taiwan’s industrial and economic development, Lien said. As the sixth-largest contributor to the US trade deficit, Taiwan recorded a US$73.9 billion trade surplus with the US last year — up from US$47.8 billion in 2023 — driven by strong
ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it would boost equipment capital expenditure by up to 16 percent for this year to cope with strong customer demand for artificial intelligence (AI) applications. Aside from AI, a growing demand for semiconductors used in the automotive and industrial sectors is to drive ASE’s capacity next year, the Kaohsiung-based company said. “We do see the disparity between AI and other general sectors, and that pretty much aligns the scenario in the first half of this year,” ASE chief operating officer Tien Wu (吳田玉) told an
RSS