{"id":466373,"date":"2010-03-24T06:11:11","date_gmt":"2010-03-24T10:11:11","guid":{"rendered":"http:\/\/blogs.wsj.com\/economics\/2010\/03\/24\/mr-yen-predicts-japanese-currency-to-strengthen\/"},"modified":"2010-03-24T06:11:11","modified_gmt":"2010-03-24T10:11:11","slug":"%e2%80%98mr-yen%e2%80%99-predicts-japanese-currency-to-strengthen","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/466373","title":{"rendered":"\u2018Mr. Yen\u2019 Predicts Japanese Currency to Strengthen"},"content":{"rendered":"

The yen is going to get stronger against the U.S. dollar, and the Japanese government should sit back and relax, according to Eisuke \u0093Mr. Yen\u0094 Sakakibara<\/strong>.<\/p>\n

The former Japanese vice finance minister for international affairs said Wednesday the Japanese currency is undervalued at its current level of around 90 yen per U.S. dollar.<\/p>\n

\u0093If anything, it will appreciate slowly toward 85, but the government should not intervene,\u0094 he said at a Credit Suisse sponsored investment conference in Hong Kong.<\/p>\n

Mr. Sakakibara, an adviser to the governing DPJ party, earned his sobriquet \u0093Mr. Yen\u0094 in the late 1990s when as a government official his public comments often moved currencies. At the time, Japan routinely intervened in foreign exchange markets to depress the yen against the dollar. It has not done so since 2004, despite pressure from exporters who say the strong yen is hurting the economy.<\/p>\n

The yen\u0092s recent strength has perplexed investors who figured Japan\u0092s declining population, massive debt and structural economic problems should weigh on the currency. But since the financial crisis, the yen has stayed strong against the dollar and other currencies. It’s 18% more valuable today compared with August 2008 against a trade-weighted basket of currencies as measured by the Bank of Japan.<\/p>\n

Mr. Sakakibara said his currency is stronger against the dollar \u0093because the Japanese economy at least in relative terms is less weak than the American economy.\u0094 He also touched on other subjects including Japanese deflation, the need for the creation of a European Union style organization for Asia, and China’s worrying asset price-increases.<\/p>\n

He called Japan\u0092s deflation \u0093structural,” a result of economic \u0093integration with East Asia.” Japan\u0092s trade with its neighbors has increased in recent years, and Japanese companies have moved production to cheaper labor centers in the region. “Mild deflation is fine,\u0094 he said.<\/p>\n

\u0093I would not worry that much about deflation. This is not a result of lack of demand, but because of the very close integration with China. Naturally Japanese prices and Japanese wages tend to come down and come closer to those of China,\u0094 Mr. Sakakibara said.<\/p>\n

He added that the growing trade ties within Asia will require new institutions modeled after the European Union. Intra-Asian trade accounts for 57% to 58% of regional exports, he said, compared with 40% in 1990. He expects it to hit 60% in the coming years. Around 65% of exports in the European Union stays within the trade bloc.<\/p>\n

\u0093We are pretty much like Europe, and we need an institution. We need a secretariat to follow up this integration,\u0094 Mr. Sakakibara said. The new organization should start with China, Korea and Japan, who should \u0093earmark some portion of foreign reserves,\u0094 he said, to the project. Japan and China have in the past proposed competing frameworks for new regional economic organizations. Japan’s proposals have sought to include a wide range of countries from as far away as Australia, India and the U.S., while China’s proposals were more oriented toward strengthening ties with a tighter knit group of countries centered on Southeast Asia.<\/p>\n

Mr. Sakakibara was asked about whether China was experiencing dangerous asset bubbles, particularly in its property markets. Despite having lived through Japan\u0092s mother of all asset bubbles in the 1980s, he dismissed worries about China.<\/p>\n

\u0093China will continue to grow around 8% to 9% for some years to come, and I don\u0092t think there\u0092s any possibility of the Chinese economy collapsing for the foreseeable future,\u0094 he said.<\/p>\n

\u0093This is probably the most robust and high-growth economy in the world. Sure, there are some bubbles in China, particularly real-estate bubbles. There may be real-estate bubbles in Hong Kong<\/a> as well,\u0094 he said, motioning to his co-presenter on stage, the head of the Hong Kong Monetary Authority. \u0093Norman Chan<\/strong> can talk about that,” Mr. Sakakibara said.<\/p>\n

He called China’s rapid asset-price increases a “necessary byproduct of a high rate of growth, and [Peoples Bank of China] Governor Zhou<\/strong> needs to tackle this bubble without really killing the Chinese economy.\u0094<\/p>\n

Mr. Sakakibara reflected on his days in the finance ministry. \u0093I was a player intervening in the currency markets. And I enjoyed it very much,\u0094 he said, to a big round of applause.<\/p>\n

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The yen is going to get stronger against the U.S. dollar, and the Japanese government should sit back and relax, according to Eisuke \u0093Mr. Yen\u0094 Sakakibara. The former Japanese vice finance minister for international affairs said Wednesday the Japanese currency is undervalued at its current level of around 90 yen per U.S. dollar. \u0093If anything, […]<\/p>\n","protected":false},"author":850,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-466373","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/466373","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/850"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=466373"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/466373\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=466373"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=466373"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=466373"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}