Europe has yet to allay investor “skepticism” about the sustainability of the region’s debt, and any spread of the crisis would cloud global economic prospects, an IMF official said.
“At least for now it looks like the spillover from the European sovereign crisis to areas outside of the region will be limited,” IMF deputy managing director Naoyuki Shinohara said in an interview late on Thursday in Tokyo. “However, if the European sovereign debt problems were to become bigger, we need to keep in mind that that could bring about considerable downside risks.”
European officials have indicated they’re ready to expand their efforts to contain the crisis that erupted last year and has so far led to bailout packages for Greece and Ireland. German Chancellor Angela Merkel this week expressed willingness to take whatever steps were needed to stem the turmoil.
The extra yield investors demand to hold Greece and Ireland bonds rather than German bunds “still remain very high, despite the rescue packages,” Shinohara said.
“That means that skepticism over the sustainability of their debt in the market hasn’t been cleared away,” said Shinohara, a former top currency official at Japan’s Ministry of Finance. “It’s important that countries reduce their budget deficit, but they also need to tackle structural issues including boosting growth and lowering unemployment.”
EURO DECLINES
The euro declined against the dollar in reaction the IMF official’s remarks. It weakened to US$1.3335 as of 10:56am in Tokyo from US$1.3364 on Thursday, when it touched US$1.3383, the highest level since Jan. 4.
“The steps that the European Union officials can announce in terms of increasing the fund’s size that they have to help the peripheral countries can still take a few weeks to happen,” Mansoor Mohi-uddin, Singapore-based head of global currency strategy at UBS AG, said in a Bloomberg Television interview.
‘STAND BY’ EURO
Merkel said on Wednesday that “we’re saying what we’ve always said since the Greek crisis: We will stand by the euro.”
She was responding to remarks made by EU Economic and Monetary Affairs Commissioner Olli Rehn, in which he called for a “comprehensive” plan to contain the sovereign debt crisis.
His proposals included an expansion of the “size and scope” of the EU’s 440 billion euro (US$577 billion) rescue fund, the European Financial Stability Facility.
The IMF official said Japan’s plan to buy bonds to fund the bailout of Ireland was a “very welcome development.”
The purchases “aren’t a bad investment” for Japan because it would involve AAA-rated bonds and offer higher yields relative to German bunds, he said.
Japanese Finance Minister Yoshihiko Noda said on Tuesday Tokyo would use existing euro assets in its foreign-exchange reserves to buy more than 20 percent of the bonds to be issued later this month by the European Financial Stability Facility.
Tokyo is considering more purchases of the European bailout bonds in coming months to help boost confidence in the euro area, according to the two officials, who spoke on condition of anonymity because the government’s plans aren’t public.
In real effective exchange-rate terms, the value of the yen is “broadly in line with medium-term fundamentals and close to its long-run historical average,” Shinohara said.
The weighted average of the yen’s exchange rate against other currencies was ¥104.25 in November after rising to ¥105.17 in October, the highest since February 2009, according to the Bank of Japan.
Shinohara also said China should allow the yuan to appreciate faster to rebalance its economy.
“We continue to view the renminbi [yuan] as substantially below the level consistent with medium-term fundamentals,” he said.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
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Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day