Japan’s prime minister signaled yesterday authorities would keep intervening to curb yen strength as sagging manufacturing confidence underscored the threat the currency poses to the fragile economic recovery.
A Reuters monthly poll that tracks the Bank of Japan (BOJ) tankan report showed manufacturing confidence dropped this month from last month for the first time in nearly a year as firms struggled with the yen’s rise to a 15-year high against the US dollar.
Responding to the concerns about the yen’s rise, authorities intervened in markets on Wednesday for the first time in six years to knock the currency lower by selling an estimated ¥2 trillion (US$23 billion).
Japanese Prime Minister Naoto Kan pointed yesterday to more yen selling if needed.
“If rapid fluctuations in the yen harm Japanese firms’ appetite for investing at home and push them to shift their factories overseas, that could further worsen job conditions and affect [our efforts] to overcome deflation,” Kan said.
“I will take decisive steps if needed from now on as well,” he told a business group.
Some currency traders see the likelihood of another round of intervention would increase if the US dollar slipped back below ¥85. It yesterday traded at ¥85.4, having strengthened from around ¥83 before the intervention.
Kan, struggling to unify his party and facing a divided parliament, wants to be proactive in tackling the yen after winning the ruling party leadership race on Tuesday.
He is expected to reshuffle his Cabinet soon, but retain Yoshihiko Noda as finance minister.
“He [Kan] is trying to send a message of his party’s solidarity. He is showing the strong intention of Japan to take decisive action through intervention,” said Ayako Sera, a market strategist at Sumitomo Trust & Banking.
A panel of junior lawmakers in the ruling Democratic Party of Japan urged the BOJ to call an extraordinary meeting to ease policy and so support the government’s efforts.
Central bank sources have said the authority has no plan to call an emergency meeting, but it is ready to act at its next scheduled meeting early next month if the economic recovery remains under threat.
The panel suggested that the BOJ increase its buying of Japanese government bonds, although BOJ Governor Masaaki Shirakawa reiterated his opposition to the idea.
“We hardly observe the fact that massive expansions in central bank balance sheets result in an increase in inflation in advanced economies,” Shirakawa said in a conference speech.
Shirakawa told a securities dealers’ gathering later yesterday that the BOJ would take timely action as needed and keep providing ample funds to money markets.
In addition, sources familiar with the matter said on Wednesday the BOJ would not drain the money flowing into the economy as a result of the selling, indicating it plans to use the sold yen as a monetary tool to boost liquidity in the economy.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to