vIndianz.com (26 Nov, 2009) — Japan’s currency rose to a 14-year high against the U.S. dollar on Wednesday, indicating new concerns about the impact on Japan’s export giants, in addition to remarks from finance minister Hirohisa Fujii hinting that the authorities stood prepared to “take action” in the occurrence of “abnormal” swings.
The yen, which has been appreciating progressively against the dollar for months, on Wednesday jumped to its firmest point against the U.S. currency ever since mid-1995, hitting 86.51 yen before falling back to some extent, to around 86.65 yen per dollar around lunchtime in Tokyo.
The yen’s power is strongly watched in Japan, whose economy is extremely reliant on exports: Many economists are concerned that a steadily strong currency is an additional load that Japan’s ailing economy can ill afford, and that could hold up its move out of the genuine recession in decades.
A strong yen is a concern for export behemoths like Sony, Toyota and Honda, as it makes their goods more costly for customers in the United States — one of the world’s chief export markets.
This is compounding the damage that is being wreaked by shoppers’ reluctance to expend on optional items like cars, fridges or DVD players.
The yen’s strength against the dollar has been in fraction motivated by factors that are further than Japan’s control. The U.S. dollar has been feeble in general for months, dipping against other main currencies similar to the euro. There is slight prospect of interest rates increasing in the U.S. any time soon — a progress that would make the dollar more striking a exchange to hold.
This means that even a direct interference in the currency markets by the Japanese government to decline the yen’s value against the dollar would probably have little long-term impact, analysts believe. Most analysts consider way involvement — by which the government would purchase dollars to deteriorate the yen — is improbable.
Further Reading- Dollar Rises Against Euro, Pound – ABC News
- Pound Drops Versus Dollar on China Tightening, Korea ‘Unease’ – Bloomberg
- Oil up in Asia as dollar slips – Economic Times
- Oil prices slip as US currency rises – MarketWatch
- 6.38 lakh jobs created
- Germany’s Economy Grew 3.6% Last Year – New York Times
- FOREX-Euro up on Asian demand, German data awaited – Reuters
- US House Panel To Hold Hearing On China’s Impact On US Interests – Wall Street Journal
- WORLD FOREX: Dollar Tad Firmer On Dip Buying, Euro Gains on Stocks – Wall Street Journal
- Euro Rises to Two-Month High Against Dollar – Wall Street Journal
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