Any continued yen sales by Japan are unlikely to weaken the currency further after last month’s intervention, analysts said, as Europe’s prolonged debt crisis bolsters demand for a haven.
Japanese Finance Minister Jun Azumi yesterday declined to comment on whether the nation has been selling yen this month after an intervention on Oct. 31 that analysts estimate amounted to a record ¥8 trillion (US$103 billion).
The nation may have continued to sell about ¥1 trillion from Tuesday to Friday last week, -according to Totan Research Co based on its analysis of the Bank of Japan’s (BOJ) current-account balances and holdings of government bonds.
“I think Japan actually intervened intermittently,” said Takahiro Sekido, who worked at the BOJ for more than a decade before becoming chief Japan economist at Credit Agricole in Tokyo. “Unless global fund flows change from risk aversion, I think it’s hard for intervention alone to put the yen on a weakening path.”
The BOJ’s current-account balances typically gain two days after foreign-exchange intervention because banks that bought yen deposit the funds into accounts at the central bank, Totan said.
The BOJ’s holdings of government bonds also rise because the Ministry of Finance sells financing bills to the central bank to get intervention funds.
Over the four business days that ended on Tuesday, increases in the current-account balances were ¥8.6 trillion more than the estimate Totan had made before Oct. 31, said Yuichi Takahashi, a market economist at the Tokyo-based money market brokerage. Considering the BOJ’s holdings of government debt jumped ¥9.09 trillion during the period, there is a “high” likelihood that interventions were conducted, he said.
The yen gained in early trading on Oct. 31 to ¥75.35 per US dollar, a postwar record. It tumbled as much as 4.7 percent from the previous close to ¥79.53, the steepest intraday drop since October 2008, after Azumi told reporters he ordered intervention. It has trimmed losses since then and traded at ¥77.55 as of 2:43pm in Tokyo.
“Even if there have been covert interventions, as the BOJ deposits data suggest, the downside risk is increasing for the dollar-yen,” said Junichi Ishikawa, an analyst in Tokyo at IG Markets -Securities Ltd. “Japan’s authorities are running out of options to weaken the yen.”
The yen resumed gains as rising borrowing costs in Italy stoked speculation Europe’s debt crisis is spreading from Greece to bigger nations. The currency may remain at ¥77 per US dollar until the end of March next year, according the median analyst estimate compiled by Bloomberg.
“My impression is that appreciation pressure for the yen is gradually increasing,” said Yunosuke Ikeda, head of Japan -foreign--exchange research at Nomura Securities Co.
Kokusai Asset Management Co’s Global Sovereign Open, Japan’s biggest mutual fund, has cut by almost half its holdings of Italian government debt to 6.6 percent of its US$26 billion portfolio over the past 12 months, a report from the fund showed last month. The fund has more than doubled the portion of Japanese bonds to 15 percent, the report showed.
Japan cannot use “stealth intervention” every day because it may attract criticism from trading partners such as the US, said Tomoko Fujii, a senior foreign-exchange strategist at Bank of America Merrill Lynch in Tokyo.
“If the intervention helps stem the yen, that could alleviate the degree of deflation temporarily,” Fujii said. “Intervention is not a permanent solution if fundamentals are against that direction.”
WASHINGTON’S INCENTIVES: The CHIPS Act set aside US$39 billion in direct grants to persuade the world’s top semiconductor companies to make chips on US soil The US plans to award more than US$6 billion to Samsung Electronics Co, helping the chipmaker expand beyond a project in Texas it has already announced, people familiar with the matter said. The money from the 2022 CHIPS and Science Act would be one of several major awards that the US Department of Commerce is expected to announce in the coming weeks, including a grant of more than US$5 billion to Samsung’s rival, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), people familiar with the plans said. The people spoke on condition of anonymity in advance of the official announcements. The federal funding for
HIGH DEMAND: The firm has strong capabilities of providing key components including liquid cooling technology needed for AI servers, chairman Young Liu said Hon Hai Precision Industry Co (鴻海精密) yesterday revised its revenue outlook for this year to “significant” growth from a “neutral” view forecast five months ago, due to strong demand for artificial intelligence (AI) servers from cloud service providers. Hon Hai, a major assembler of iPhones that is also known as Foxconn, expects AI server revenues to soar more than 40 percent annually this year, chairman Young Liu (劉揚偉) told investors. The robust growth would uplift revenue contribution from AI servers to 40 percent of the company’s overall server revenue this year, from 30 percent last year, Liu said. In the three-year period
LONG HAUL: Largan Energy Materials’ TNO-based lithium-ion batteries are expected to charge in five minutes and last about 20 years, far surpassing conventional technology Largan Precision Co (大立光) has formed a joint venture with the Industrial Technology Research Institute (ITRI, 工研院) to produce fast-charging, long-life lithium-ion batteries for electric vehicles, mobile electronics and electric storage units, the camera lens supplier for Apple Inc’s iPhones said yesterday. Largan Energy Materials Co (萬溢能源材料), established in January, is developing high-energy, fast-charging, long-life lithium-ion batteries using titanium niobium oxide (TNO) anodes, it said. TNO-based batteries can be fully charged in five minutes and have a lifespan of 20 years, a major advantage over the two to four hours of charging time needed for conventional graphite-anode-based batteries, Largan said in a
Taiwan is one of the first countries to benefit from the artificial intelligence (AI) boom, but because that is largely down to a single company it also represents a risk, former Google Taiwan managing director Chien Lee-feng (簡立峰) said at an AI forum in Taipei yesterday. Speaking at the forum on how generative AI can generate possibilities for all walks of life, Chien said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — currently among the world’s 10 most-valuable companies due to continued optimism about AI — ensures Taiwan is one of the economies to benefit most from AI. “This is because AI is