Today, the Yen (the Japanese currency) soars a 14 year high against US Dollar. It reaches a symbolic level of 88 Yen for 1 US Dollar. The Euro lost almost half a percent to reach 131.93 yen for 1 Euro. It has been observe that investor bought Yen when Japan reported that its exports improved and therefore boosts hopes for a more solid economic recovery.
The macroeconomic indicators of Japan are better than predicted, such as exports falling less than what analysts reported earlier in the year. As a matter of fact, exports grew in October for the third month in a role thanks to expending shipments to Asia. Indeed, the strong recovery in the region will support the country's export-driven economy for the rest of this year. Moreover Japan’s economy grew by 4.8% in the third quarter, due to a mix of government stimulus and an increasing domestic demand. Therefore, these last months, the Japanese currency the Yen rose significantly against the Dollar, the Pound and even the Euro, which is currently a trusted hard currency. And that’s exactly what analysts feared. As the currency appreciates, the competitiveness of Japan’s exportation will decline, and therefore will slow down the economical recovery of the country.
In my opinion, the Japanese central bank should intervene in a few days to stop this currency appreciation. The Japanese central is not independent, and by implication the government could ask to buy foreign currency in order to protect the country and its exportations. They could also put more currency on the market, but in the case Japan will face inflation. To set an adjusted monetary policy is not an easy task. They are many different way to solve the problem but each of them will have economical and macro economical consequences. At the moment, from my point of view, the best solution should be to buy foreign currency, especially US Dollars, to protect the currency’s rise.
This new story says more about the current situation than the rise of the Yen. As I wrote before, the economical power is shifting to the East, and obviously Japan is also recovering its economical power after years of recession. In my opinion, this new story is another proof this shifting.
This news story has an international scope, and therefore where reported in most of the international press, and more particularly in the economic press. We could find out two different types of headlines: The first type stress the growth in the Japanese exports, the second one the rise of the Yen against the hard currencies.
The BBC, Reuters and The Japan Times Online were from the first type. BBC published “Japanese exports fall at slowest rate in a year” (Nov. 25). It was a really short article with some facts and figures about the Japanese exports but the rise of Yen was not even mentioned. They didn’t really analyze these numbers and didn’t go through the whole subject. Their superficial analyze was based on quotations of two analysts. It could be described as a poor information-given article. By contrast Reuters gave a deeper analyze of the subject, covering different point of view, topics and implications. They published “Japan export rebound eases fear of new recession” (H. Sano, Nov 25). They wrote about the Japanese exports, the growth rate and the rise of the Yen quoting different analysts as well as making their own analysis. Moreover, they provide a chart of the Japanese exports of the last 18 months. The style of writing is always the same, short and straight to the point. The Japan Times Online didn’t write the article, they just copy the article from Bloomberg. I was expecting from this press organization some well written article with a different point of view, therefore I was quite disappointed.
On the other hand, the Financial Times and the Wall Street Journal stressed more the rise of the Yen. The FT wrote “Dollar hits 14-year low on yen” (L. Whipp, Nov. 26), which stress more that the dollar is weak than that the Yen is strong. As usual, the FT article was complete providing not too much figures but enough to understand the subject. Many analysts from around the world (Europe, United States and Japan) were quoted which gives a more impartial view of the situation. By contrast with the FT headline, the Wall Street Journal published Yen Hits 10-Month High Following Improved Trade Data” (A. Monahan, Nov. 25) which gave the opposite view of the situation. As a matter of fact, they underlined more the fact the Japanese Yen became stronger than the fact that the dollar became weaker and weaker these last months. This could be understood, knowing that the WSJ is an American press organization. Likewise, we have here some bias due to the nationality of the press organization, even if in this case, it is the Yen that became stronger (also against the Euro and Pound). The article itself could have been written by the same other. Indeed, the same facts and figure are used.
Q. Piloy
Source:
http://news.bbc.co.uk/1/hi/business/8377900.stm
http://www.reuters.com/article/economicNews/idUST32307220091125?pageNumber=1&virtualBrandChannel=11604
http://search.japantimes.co.jp/cgi-bin/nb20091126n1.html
http://www.ft.com/cms/s/0/f93521e2-da44-11de-b2d5-00144feabdc0.html
http://online.wsj.com/article/SB125910929664263229.html
The macroeconomic indicators of Japan are better than predicted, such as exports falling less than what analysts reported earlier in the year. As a matter of fact, exports grew in October for the third month in a role thanks to expending shipments to Asia. Indeed, the strong recovery in the region will support the country's export-driven economy for the rest of this year. Moreover Japan’s economy grew by 4.8% in the third quarter, due to a mix of government stimulus and an increasing domestic demand. Therefore, these last months, the Japanese currency the Yen rose significantly against the Dollar, the Pound and even the Euro, which is currently a trusted hard currency. And that’s exactly what analysts feared. As the currency appreciates, the competitiveness of Japan’s exportation will decline, and therefore will slow down the economical recovery of the country.In my opinion, the Japanese central bank should intervene in a few days to stop this currency appreciation. The Japanese central is not independent, and by implication the government could ask to buy foreign currency in order to protect the country and its exportations. They could also put more currency on the market, but in the case Japan will face inflation. To set an adjusted monetary policy is not an easy task. They are many different way to solve the problem but each of them will have economical and macro economical consequences. At the moment, from my point of view, the best solution should be to buy foreign currency, especially US Dollars, to protect the currency’s rise.
This new story says more about the current situation than the rise of the Yen. As I wrote before, the economical power is shifting to the East, and obviously Japan is also recovering its economical power after years of recession. In my opinion, this new story is another proof this shifting.
This news story has an international scope, and therefore where reported in most of the international press, and more particularly in the economic press. We could find out two different types of headlines: The first type stress the growth in the Japanese exports, the second one the rise of the Yen against the hard currencies.
The BBC, Reuters and The Japan Times Online were from the first type. BBC published “Japanese exports fall at slowest rate in a year” (Nov. 25). It was a really short article with some facts and figures about the Japanese exports but the rise of Yen was not even mentioned. They didn’t really analyze these numbers and didn’t go through the whole subject. Their superficial analyze was based on quotations of two analysts. It could be described as a poor information-given article. By contrast Reuters gave a deeper analyze of the subject, covering different point of view, topics and implications. They published “Japan export rebound eases fear of new recession” (H. Sano, Nov 25). They wrote about the Japanese exports, the growth rate and the rise of the Yen quoting different analysts as well as making their own analysis. Moreover, they provide a chart of the Japanese exports of the last 18 months. The style of writing is always the same, short and straight to the point. The Japan Times Online didn’t write the article, they just copy the article from Bloomberg. I was expecting from this press organization some well written article with a different point of view, therefore I was quite disappointed.
On the other hand, the Financial Times and the Wall Street Journal stressed more the rise of the Yen. The FT wrote “Dollar hits 14-year low on yen” (L. Whipp, Nov. 26), which stress more that the dollar is weak than that the Yen is strong. As usual, the FT article was complete providing not too much figures but enough to understand the subject. Many analysts from around the world (Europe, United States and Japan) were quoted which gives a more impartial view of the situation. By contrast with the FT headline, the Wall Street Journal published Yen Hits 10-Month High Following Improved Trade Data” (A. Monahan, Nov. 25) which gave the opposite view of the situation. As a matter of fact, they underlined more the fact the Japanese Yen became stronger than the fact that the dollar became weaker and weaker these last months. This could be understood, knowing that the WSJ is an American press organization. Likewise, we have here some bias due to the nationality of the press organization, even if in this case, it is the Yen that became stronger (also against the Euro and Pound). The article itself could have been written by the same other. Indeed, the same facts and figure are used.
Q. Piloy
Source:
http://news.bbc.co.uk/1/hi/business/8377900.stm
http://www.reuters.com/article/economicNews/idUST32307220091125?pageNumber=1&virtualBrandChannel=11604
http://search.japantimes.co.jp/cgi-bin/nb20091126n1.html
http://www.ft.com/cms/s/0/f93521e2-da44-11de-b2d5-00144feabdc0.html
http://online.wsj.com/article/SB125910929664263229.html
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