Japan's finance minister said yesterday that authorities are closely monitoring the yen's rise against the US dollar but offered no clear sign of currency-market intervention to weaken the yen.
Meanwhile, a board member of the Bank of Japan said the central bank must carefully watch how problems in the US housing market might affect Japan's economy, suggesting that he doesn't see an imminent need to raise interest rates.
Worries about weakness in the US economy -- Japan's biggest export market -- and recent volatility in global financial markets have driven the US dollar to a two-and-a-half-year low, touching ?108.25 overnight. A strong yen hurts Japan's exporters by eroding their foreign-earned income.
Asked about the dollar's drop, Finance Minister Fukushiro Nukaga told Dow Jones Newswires that "we will closely watch that issue."
Nukaga expressed caution about the outlook for Japan's economy, repeated that the government must closely monitor how the so-called subprime mortgage crisis affects consumer spending in the US.
Separately, Bank of Japan (BOJ) board member Seiji Nakamura said that Japan's economy may suffer if problems in the US housing and banking sectors become more severe or fluctuations in financial markets increase.
"The global economy may deteriorate if the US economy sharply worsens," he said. "There is also the possibility that the Japanese economy may be negatively influenced."
The BOJ last raised interest rates to 0.5 percent in February. Many market players now believe the BOJ won't raise rates before the fiscal year ends in March.
Nakamura stressed that leaving monetary policy too easy for too long carries its own risks.
"Real interest rates remain at very low levels. If the expectation takes hold that interest rates will remain low for a long time, it will produce distortion in price formation in the market and allocation of resources. We have to cautiously watch the risk," he said.
But he offered few hints to the timing of the next rate hike.
Meanwhile, the head of China's central bank says Beijing wants a strong US dollar, a government news agency said yesterday.
Zhou Xiaochuan (周小川), governor of the People's Bank of China, made the comment to US Treasury Secretary Henry Paulson at a conference in South Africa, the Xinhua news agency said.
"Zhou said he told Paulson China hopes to see a strong dollar," Xinhua reported.
It said Zhou was responding to Paulson's prediction of a long-term recovery of the weakening dollar, which fell to another record low against the euro yesterday.
Zhou's comments put "weight behind the slumping currency," Xinhua said.
The US dollar has been falling against the euro, yen and other major currencies amid fears for the health of the US economy, stoked by the subprime mortgage crisis. Concerns about the US' huge trade deficit, which leaves more dollars in the hands of foreigners, is also weighing on the currency.
China keeps a large share of its US$1.43 trillion in reserves in US dollar-denominated assets such as US Treasuries, which means a falling dollar erodes the value of its holdings. Financial markets are watching to see whether Beijing shifts to a stronger currency such as the euro.
Zhou said that only when the dollar "devalues drastically can it be called weak, the scenario of which is likely to bring uncertainty to the world economy, to the reluctance of all parties concerned," Xinhua reported.
Zhou and Paulson were attending a meeting of the G20 -- the world's 20 biggest economies.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
REGIONAL STABILITY: Taipei thanked the Biden administration for authorizing its 16th sale of military goods and services to uphold Taiwan’s defense and safety The US Department of State has approved the sale of US$228 million of military goods and services to Taiwan, the US Department of Defense said on Monday. The state department “made a determination approving a possible Foreign Military Sale” to the Taipei Economic and Cultural Representative Office in the US for “return, repair and reshipment of spare parts and related equipment,” the defense department’s Defense Security Cooperation Agency said in a news release. Taiwan had requested the purchase of items and services which include the “return, repair and reshipment of classified and unclassified spare parts for aircraft and related equipment; US Government
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from