Japanese exports have been hit by the strength of the yen
30 September 2011 Last updated at 08:19
http://www.bbc.co.uk/news/business-15121752
Japan’s government has authorised the use of additional funds to help prevent the yen strengthening further, as figures show a slowdown in the growth of industrial output.
The Finance Ministry said it could spend another 15tn yen ($196bn; £125bn) to stabilise the currency, which has risen in value as investors look for safety amid economic uncertainty.
Meanwhile, data showed factory output rose by 0.8% in August.
This was less than analysts expected.
“The recent 75-80 yen range [against the dollar] could pour cold water on the Japanese economic recovery,” said Finance Minister Jun Azumi.
“We will take bold actions when needed and we don’t rule out taking any necessary measures.”
A strong yen makes Japanese exports more expensive to overseas buyers.
As well as boosting the fund designed to stabilise the yen, the government said it would continue to monitor foreign exchange traders’ positions in order to deter currency speculation.
This is the latest in a series of moves by recent governments to halt the strength of the yen. Prime Minister Yoshihiko Noda’s recently-elected government has already announced subsidies for companies struggling to remain competitive.
Retail slump
Although industrial output grew by 0.8% in August, the government said it expected output to fall by 2.5% in September, before rebounding strongly in October.
On Thursday, figures showed a sharp fall in retail sales in August as a post-earthquake rebound petered out.
Sales fell 2.7% versus a year ago, a much sharper decline than the 0.6% rate expected by markets.
This week’s data has led some analysts to question the strength of Japan’s post-earthquake recovery.
If Japan starts to try to lower the price of the Yen whilst Bank of America continues to be on the brink of outright collapse, well this will be seen as an act of War. The Crown Maltese at Osaka will initiate the next big attack on Japan which will come in the form of another climate accident or even a straight nuclear incident which will of course aid in their wanting destruction of nuclear energy. Bank of America is being held up by the Japanese Yen and the Crown don’t give a monkeys about the recovery of Japan. I told you that Geithner and Bernanke are funneling currency from Japan via the disaster and hiding it whilst not having to have a Quantitative Easing III just yet. Its all about the Yen whilst The Worshipful Company of Fuellers are blackballing Japan with threats of further destruction.
-The Unhived Mind
Do you want a reminder?
Buffett: BofA Needs ‘Much Longer’ to Clean Up
By Andrew Frye and Hugh Son – Sep 30, 2011
http://www.bloomberg.com/news/2011-09-30/buffett-says-bank-of-america-s-problems-to-take-much-longer-to-clean-up.html
Warren Buffett, whose Berkshire Hathaway Inc. (BRK/A) invested $5 billion in Bank of America Corp. (BAC), said that problems at the biggest U.S. lender by assets will take “much longer” to clean up.
“The bank has a wonderful underlying business — it’s got lots of problems,” Buffett, 81, told Bloomberg Television’s Betty Liu today in an interview from the floor of the New York Stock Exchange.
“The bet is, is Brian going to get rid of those problems?” Buffett said, referring to Bank of America Chief Executive Officer Brian T. Moynihan, 51. “It won’t take six months or a year; it will take much longer than that even. But the underlying business is doing fine.”
Bank of America, which has lost more than half its market value this year as mortgage-related costs climb, pays Berkshire $300 million annually in preferred stock dividends and gave the company warrants to purchase 700 million shares of common stock for $7.14 each. The deal was announced on Aug. 25, two weeks after Moynihan said his firm had enough capital.
Moynihan, who has been in charge of the Charlotte, North Carolina-based bank since the start of 2010, should be given time to turn the firm around, Buffett said.
“I don’t want him to step down,” Buffett said. “Brian, stay at work.”
Bank of America fell 14 cents, or 2.2 percent, to $6.21 at 1:34 p.m. on the NYSE. The shares have slipped about 53 percent this year.
Selling Assets
The lender is selling assets and settling claims brought by mortgage investors as Moynihan reshapes the company. Bank of America posted a record $8.8 billion loss in the three months ended June 30, the company’s third deficit in four quarters. Buffett’s investment is “a strong endorsement” in the bank, Moynihan said in the Aug. 25 statement announcing the deal.
“Eventually, the troubles of the past will be cleaned up,” Buffett said. “And then you’ll have a wonderful business that’s going to earn a lot of money.”
Berkshire, which generates earnings of about $1 billion a month, is seeking uses for a cash hoard that totaled $47.9 billion at the end of June. This month, Buffett completed the takeover of Lubrizol Corp. for about $9 billion. On Sept. 26, Berkshire announced a plan to repurchase shares.
When asked if Moynihan gave him a special deal unavailable to small investors, Buffett replied that the preferred stock of the bank was also selling at an attractive yield.
“You could have gone out, the day before we bought it, and gotten a 9 percent yield yourself,” Buffett said.
Bank of America announced yesterday that it would join other large banks in charging a fee for some debit-card users to recoup revenue lost after new federal rules capped so-called swipe fees. The lender will start a $5 monthly charge in January, said Anne Pace, a company spokeswoman.
“There are 7,000 banks in the United States, and if somebody else offers a better deal, people can go to that,” Buffett said today on CNN. “It’s just like you can change channels on television.”
Dollar, Yen Gain as Global Slowdown Concern Boosts Haven Demand
By Catarina Saraiva and Garth Theunissen – Sep 30, 2011
http://www.bloomberg.com/news/2011-09-29/yen-dollar-strengthen-as-global-slowdown-concern-boosts-demand-for-haven.html
The dollar and the yen strengthened as growing evidence that the global economy is slowing boosted investor demand for currencies perceived as being the safest.
The 17-nation euro posted its biggest monthly decline against the yen in more than a year after data showed German retail sales fell by more than economists forecast and U.S. consumer spending slowed in August. New Zealand’s dollar extended its second week of losses against its U.S. counterpart after Standard & Poor’s joined Fitch Ratings in cutting the nation’s credit ratings. The Swiss franc strengthened against the euro even after the central bank said it will prevent currency gains.
“Today is a good reminder of the struggles the currency markets have faced throughout the entire quarter: that’s been concerns about global growth and then you’ve got the euro zone’s long-running debt crisis,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency- exchange network. “The dollar, overall, is making some nice gains against the euro.”
The dollar strengthened 1.5 percent to $1.3387 per euro at 5 p.m. in New York, extending its advance this month to 7.3 percent. The Japanese currency gained 1.3 percent to 103.12 per euro, set for a 7 percent advance this month. The greenback rose 0.3 percent to 77.06 yen, after touching the strongest level since Sept. 15.
Kiwi Weak
The New Zealand dollar sank for a third day, dropping 1.3 percent to 76.14 U.S. cents, taking its loss this week to 2 percent and its monthly decline to 11 percent.
The yen has gained 12.6 percent in the past three months, the best performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar is up 7.1 percent, while the euro is down 2 percent.
Brazil’s real fell the most against the dollar today among the major currencies, dropping 2.1 percent to 1.8794. Canada’s dollar touched C$1.0504, its weakest level since Sept. 8, 2010.
The Swiss National Bank will enforce the cap on the franc with all its determination, central bank President Philipp Hildebrand said at an event in Geneva yesterday.
“We will defend the ceiling with all measures,” Hildebrand said. He declined to comment on the extent of the central bank’s currency purchases to maintain the cap, calling the measure “credible.”
Franc Ceiling
The SNB on Sept. 6 imposed a franc ceiling of 1.20 versus the euro and resumed purchases of foreign currencies to protect exports as the euro-zone debt crisis drove investors toward the relative safety of the Swiss currency.
The franc strengthened as much as 0.6 percent before trading up 0.3 percent to 1.2157 per euro.
Signs that the euro area’s debt crisis is hurting the region’s economy have prompted speculation that the European Central Bank will lower borrowing costs next week.
Eight of 32 economists surveyed by Bloomberg News said the central bank will cut its benchmark interest rate by at least a quarter-percentage point from the current rate of 1.5 percent at its Oct. 6 policy meeting. The others expect no change.
European inflation unexpectedly accelerated to the fastest in almost three years in September, complicating the ECB’s task as it fights the region’s worsening sovereign-debt crisis.
The euro-area inflation rate jumped to 3 percent this month from 2.5 percent in August, the European Union’s statistics office in Luxembourg said today in an initial estimate. That’s the biggest annual increase in consumer prices since October 2008. Economists had projected inflation to hold at 2.5 percent, according to the median estimate in a Bloomberg survey.
ECB Reading
Swaps traders are betting the central bank will lower the rate by 40 basis points over the next 12 months, according to a Credit Suisse Group AG index. That compares with a 25 basis- point increase projected at the beginning of August.
“The European economy has slowed, but it’s not enough to justify another easing,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “A steady hand from the ECB will probably help the euro a little bit next week, but it’ll only be a temporary respite from a lively, very sharp fall.”
Franulovich said the euro will trade in the low $1.30s by the end of the year.
German retail sales, adjusted for inflation and seasonal swings, slumped 2.9 percent in August from July, when they rose 0.3 percent, the Federal Statistics Office in Wiesbaden said today. That’s the biggest drop since May 2007. Economists forecast a 0.5 percent decline. Sales rose 2.2 percent in the year.
Consumer Mood
Consumer spending in the U.S. gained 0.2 percent in August after a revised 0.7 percent increase the previous month, Commerce Department figures showed today.
New Zealand lost its AAA grades on local-currency debt at Fitch Ratings and Standard & Poor’s, which both cited concerns about the nation’s fiscal burden. The outlook is stable after the long-term local-currency rating was reduced to AA+ and the foreign-currency rating was cut to AA from AA+, S&P said in a statement, matching actions announced yesterday by Fitch.
Japanese Finance Minister Jun Azumi said he’s asked for the issuance limit of bills to finance foreign-exchange intervention to be raised by 15 trillion yen.
He also told reporters in Tokyo today that the ministry’s monitoring of financial institutions’ foreign-exchange market positions will be extended to the end of December.