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Archive for the tag “yen”

Emerging Asia Can’t Just Rely On China

If you think Federal Reserve Chair Janet Yellen is stressed, spare a thought for Agus Martowardojo. On Tuesday, the governor of Indonesia’s central bank had to choose between cutting interest rates to support growth or hiking them to prop up his currency. He ultimately decided to split the difference and do nothing. Martowardojo’s dilemma is emblematic of the increasingly chaotic situation in the world’s emerging markets.

Read Here – Bloomberg

In Dollar We Believe

Since 1976, the US dollar’s role as an international currency has been slowly waning. International use of the dollar to hold foreign-exchange reserves, denominate financial transactions, invoice trade, and as a vehicle in currency markets is below its level during the heyday of the Bretton Woods era, from 1945 to 1971. But most people would be surprised by what the most recent numbers show.

Read Here – Project Syndicate

Global Currency Battles: A Waiting Disaster or a Win for All?

At the end of last year, Japanese Prime Minister Shinzo Abe fired a loud salvo. In a forceful attempt to kick start Japan‘s economy from its decade-long stupor, Abe leaned on the Bank of Japan to set a 2% inflation target. He threatened to pass a law to limit the central bank‘s independence if it balked. “Countries around the world are printing more money to boost their export competitiveness,” said Abe. “Japan must do so, too.” The Bank of Japan caved, vowing to step up purchases of government bonds starting next January.

Read Here – Knowledge@Wharton

Shinzo Abe Is Brave, But Is He Wise?

Japan’s new prime minister, Shinzo Abe, is proposing a bold departure for his country’s economy. He’s mostly right. Japan continues to underperform, and bad macroeconomic policy has been the main reason. Abenomics isn’t riskless or easy, however. The government will have to be wise as well as brave.

Abe advocates what he calls a “three arrows” approach to expansionary policy: monetary, fiscal and structural. On two of the three, change is under way. He has pressured the Bank of Japan to end deflation by adopting a new inflation target and forthright quantitative easing. He has announced a supplementary budget that will further increase the government deficit. As yet, the supply-side part of the program is vague.

Read Here – Bloomberg

Phoney Currency Wars

OFFICIALS from the world’s biggest economies meet on February 15th-16th in Moscow on a mission to avert war. Not one with bombs and bullets, but a “currency war”. Finance ministers and central bankers worry that their peers in the G20 will devalue their currencies to boost exports and grow their economies at their neighbours’ expense.

Read Here – The Economist

The Unloved Dollar Standard

Since World War II’s end, the dollar has been used to invoice most global trade, serving as the intermediary currency for clearing international payments among banks and dominating official foreign-exchange reserves. This arrangement has often been criticized, but is there any viable alternative?

The problem for postwar Europe, mired in depression and inflation, was that it lacked foreign reserves, which meant that trade carried a high opportunity cost. To facilitate trade without requiring payment after each transaction, the Organization for European Economic Cooperation created the European Payments Union in 1950.

Read Here – Japan Times

Facebook Needs a Dislike Button for Abe’s Ideas

For Shinzo Abe, it isn’t enough to see Sony Corp. and Panasonic Corp., two icons of industrialJapan, reduced to junk-debt status. The man who probably will become prime minister next month might do the same for the yen.

That is the upshot of his desire to browbeat the Bank of Japan into unlimited easing. Granted, his Liberal Democratic Party did that for most of the half-century it was in power until 2009. But Abe’s designs on the BOJ smack of a monetary jihad that would do more harm than good.

Read Here – Bloomberg

Rising Yuan In The Land Of Setting Yen

The directors of the International Monetary Fund and the World Bank return to Tokyo this week for their annual meetings after a gap of 48 years. It’s a different Japan. The ageing of the host nation, the rise of China, the “shift” of the epicentre of global growth to mainland Asia, in more ways than one, have subdued what was in 1964 —when the Fund and Bank last met here — the “land of the rising Yen”. The “shocks” administered to the global economy by the recent trans-Atlantic financial crisis have further accelerated these “shifts”, and the Yuan now rises where the Yen once shined.

Read Here – The Hindu

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