The yen had its biggest gain in a month against the dollar, ending an 11-day slide, after Japanese officials said the government may give money to banks to help them write off more than US$1 trillion in bad debt.
"If they're going to deal with the banking problems, that would bode well for the yen" by attracting foreign capital, said Grant Wilson, a senior currency trader at Mellon Financial Group in Pittsburgh. It shows they're "taking the steps they need to reform the economy," he said.
The eight biggest Japanese banks said in November they had ?20 trillion (US$152 billion) in problem loans at the end of March, a figure that reached ?150 trillion when all nationwide loans were taken into account, according to financial regulators.
Japan's currency rose to ?131.05 per dollar, from ?131.79 in New York yesterday, for only its second gain this month. It strengthened to ?115.82 per euro from ?116.30.
The third recession in a decade in the world's second-largest economy has pushed the yen down 14.5 percent against the dollar This year, its steepest loss since 1989. Investors are speculating Japanese officials are letting the yen fall to boost exports and spur growth.
On the week, the yen is down 1.3 percent against the dollar, the fourth week of losses, and sank 0.5 percent against the euro, for a seventh weekly decline. The drop came on concern Japan's slump is worsening. Figures today showed the jobless rate rose to 5.5 percent, the highest level in almost half a century.
Prime Minister Junichiro Koizumi and Taku Yamasaki, secretary general of the ruling Liberal Democratic Party, yesterday discussed using public funds to support banks while they deal with bad loans -- such as those on which payments are delinquent or the borrower is bankrupt, Chief Cabinet Secretary Yasuo Fukuda said yesterday.
Bank shares, which tumbled to 18-year lows earlier this month, surged today on expectations for a bailout and after the Mainichi newspaper reported the government will release a new economic ``vision'' for the banks early next year.
"If they're really able to help the banking system, that would be a tremendous improvement" that would bolster the yen, said Mark Thome, a vice president of foreign exchange at Fortis USA Financial Markets.
Cleaning up banks' balance sheets would raise expectations for an increase in lending that may help Japan pull out of recession, he said.
The slump in bank shares this month coincided with the largest net sale of Japanese stocks by foreigners since May 2000, totaling US$3.7 billion in the week through Dec. 14, according to the Tokyo Stock Exchange.
Some analysts said giving money to banks would be bad for the yen, as it may prove to be only a temporary salve to get them through fiscal-yearend reporting at the end of March.
The Central Weather Administration (CWA) yesterday said it is expected to issue a sea warning for Typhoon Fung-wong this afternoon and a land warning tomorrow. As of 1pm, the storm was about 1,070km southeast of Oluanpi (鵝鑾鼻), Taiwan’s southernmost point, and was moving west-northwest at 28 to 32kph, according to CWA data. The storm had a radius of 250km, with maximum sustained winds of 173kph and gusts reaching 209kph, the CWA added. The storm is forecast to pass near Luzon in the Philippines before entering the South China Sea and potentially turning northward toward Taiwan, the CWA said. CWA forecaster Chang Chun-yao (張峻堯) said
PREPARATION: Ferry lines and flights were canceled ahead of only the second storm to hit the nation in November, while many areas canceled classes and work Authorities yesterday evacuated more than 3,000 people ahead of approaching Tropical Storm Fung-wong, which is expected to make landfall between Kaohsiung and Pingtung County this evening. Fung-wong was yesterday morning downgraded from a typhoon to a tropical storm as it approached the nation’s southwest coast, the Central Weather Administration (CWA) said, as it issued a land alert for the storm. The alert applies to residents in Tainan, Kaohsiung, Pingtung and Taitung counties, and the Hengchun Peninsula (恆春). As of press time last night, Taichung, Tainan, Kaohsiung, and Yilan, Miaoli, Changhua, Yunlin, Pingtung and Penghu counties, as well as Chiayi city and county had
The Central Weather Administration (CWA) yesterday issued a sea alert for Typhoon Fung-wong (鳳凰) as it threatened vessels operating in waters off the Pratas Islands (Dongsha Islands, 東沙群島), the Bashi Channel and south of the Taiwan Strait. A land alert is expected to be announced some time between late last night and early this morning, the CWA said. As of press time last night, Taoyuan, as well as Yilan, Hualien and Penghu counties had declared today a typhoon day, canceling work and classes. Except for a few select districts in Taipei and New Taipei City, all other areas and city
VIOLATION OF NORMS: China’s CCTV broadcast claimed that Beijing could use Interpol to issue arrest warrants, which the MAC slammed as an affront to order The Mainland Affairs Council (MAC) yesterday condemned the Chinese Communist Party (CCP) for attempts to intimidate Taiwanese through “transnational repression.” The council issued the remarks after state broadcaster China Central Television (CCTV) yesterday during a news broadcast aired a video targeting Democratic Progressive Party (DPP) Legislator Puma Shen (沈伯洋), threatening him with “cross-border repression” and saying: “Stop now, or you will be next,” in what Taipei officials said was an attempt to intimidate not only Shen, but also the broader Taiwanese public. The MAC in a statement condemned the threat, accusing Beijing of trying to instill fear and self-censorship among Taiwanese and
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