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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Yen Drops Versus Peers as Tankan Fuels Easing Speculation

Posted by WARREN MOSLER on April 2nd, 2012

Right!
Lower rates!
More QE!

Be patient, monetary policy works with a lag
It’s only been 20 years
Hyper inflation is just around the corner…

Yen Drops Versus Peers as Tankan Fuels Easing Speculation

April 2 (Bloomberg) — The yen weakened versus all of its major peers after a Bank of Japan (8301) report showed that sentiment failed to improve at the nation’s largest companies, stoking prospects the central bank will boost monetary stimulus.

The Japanese currency slid against the dollar and euro as signs that manufacturing is improving in the U.S. and China, the world’s two biggest economies, undermined demand for haven assets. The euro remained higher after a quarterly gain versus the greenback as European governments called for a bigger global financial emergency fund after engineering a firewall to fight the region’s debt crisis.

“The worse-than-expected Tankan survey seems to be fueling talk that the BOJ will ease policy further,” Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore, said about the central bank’s quarterly sentiment survey. “This is probably leading to selling of the yen.”

The yen lost 0.4 percent to 83.18 per dollar as as of 10:19 a.m. in Tokyo. It slid 0.4 percent to 110.97 per euro. Europe’s 17-nation currency was little changed at $1.3341 after rising 3 percent versus the greenback in the three months ended March 31.

The Tankan index for Japan’s largest manufacturers was unchanged last quarter from minus 4 in December, the BOJ said today in Tokyo. That was less than the median estimate of minus 1 in a Bloomberg News survey of economists. A negative number means pessimists outnumber optimists.

BOJ Meetings

BOJ policy board members are scheduled to meet April 9-10 and April 27 this month. The central bank held off from expanding asset purchases at its meeting in March as it monitored improvements in the economy. In February, it expanded bond purchases by 10 trillion yen ($120 billion) and set a 1 percent inflation goal in February.

The Institute for Supply Management’s factory index for the U.S. probably rose to 53 last month from 52.4 in February, according to the median estimate of economists surveyed by Bloomberg before the figures are released today.

An index of Chinese manufacturing climbed to 53.1 last month, the highest since March 2011, the logistics federation and the National Bureau of Statistics said yesterday. The measure has a pattern of rising each March.

9 Responses to “Yen Drops Versus Peers as Tankan Fuels Easing Speculation”

  1. Monica Smith Says:

    “Sentiment”? The central bank responds to sentiment? That explains a lot.
    Of course, Japan is not alone. Our own Lord of Little Rock, Warren Stephens, lays much blame on “uncertainty.”

    Reply

  2. Save America Says:

    Monetary policy works with a lag! LOL! Good one warren, some people predict US dollar currency revulsion, it took 40 years to bring about:

    http://www.zerohedge.com/news/brics-bank-rival-world-bank-and-imf-and-challenge-dollar-dominance
    Less noticed and commented upon is the aspirations of the BRIC nations to become less dependent on the global reserve currency, the dollar and to position their own currencies as internationally traded currencies.

    The leaders of BRIC nations and other emerging market nations have adopted the idea of conducting trade between the five nations in their own currencies. Two agreements, signed among the development banks of Brazil, Russia, India, China and South Africa, say that local currency loans will be made available for trade between these countries.

    The five fast growing nations participating in local currency trade will allow participants to diversify their foreign exchange reserves, hedging against the growing risk of a euro or dollar crisis.

    The BRICS want to have easy convertibility of currency to make it easier to use the real, ruble, rupee, renminbi and rand amongst themselves without having to always use the US dollar. Higher intra-Brics trade, conducted in their own currencies would shield their economies from economic dislocations in the west.

    We better have some more shock and awe to keep that petrodollar regime in place that we all benefit from in the USA.

    On another note my mom went to target for a hair clip, 4 dollars, she said nope, will go to a dollar store and find one for a dollar, she couldn’t find one, told me china aint sending us stuff like they used to. The problem is, I don’t want to stop reading MMT blogs and get off my bum and start making hairclips to meet US consumer demand.

    Reply

    roger erickson Reply:

    @Save America,

    > The leaders of BRIC nations and other emerging market nations
    > have adopted the idea of conducting trade between the five
    > nations in their own currencies.

    This should be good. How will they possibly all be net exporters and keep everyone’s budget “balanced”? And, everyone’s Fx rate above average to boot? :)

    Reply

    Save America Reply:

    @roger erickson, The comments at the link said China is heavily dependent on food for the 1 billion and maybe brazil could take up some of the exports if they stop importing our food. Most of the fresh fruits and vegetables I am buying come from south america. China, brazil, south africa, india and russia all trading food, energy and manufactured goods back and forth, why keep USA as the middle man?

    Reply

    Unforgiven Reply:

    @roger erickson,

    We can have a lottery. The winners get to devalue their currency on the fx and net export. Goldman can set it up.

    Reply

  3. SteveK9 Says:

    Anyone else tired of ‘Save America’?

    Reply

    Sergei Reply:

    @SteveK9,

    “Anyone else tired of ‘Save America’?”

    No, why? Honestly. Do not like him – do not read him. But it gets boring when everybody agrees with everybody else.

    Reply

    Dave Begotka Reply:

    @SteveK9,

    Sometimes he over types but is amusing

    Nobody can save anybody from anything if they cannot save them selves

    Reply

  4. Yuu Kim Says:

    did someone say “cognitive dissonance?”

    Reply

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