The Japanese currency climbed to a one-week high, having slumped to the weakest level in four years on April 11 at just short of 100 per dollar. It’s depreciated 20 percent against its U.S. counterpart in the past six months, extending the drop after the Bank of Japan (8301) expanded monetary easing, which tends to debase the currency, on April 4. The Treasury said it would pressure Japan to avoid “targeting its exchange rate for competitive purposes” in its semi-annual currency report to Congress released in Washington on April 12.
A customer holds a 1,000 yen bank note at a supermarket in Tokyo. The yen has lost at least 6 percent against all of its 16 major peers tracked by Bloomberg this year. Photographer: Tomohiro Ohsumi/Bloomberg
“You can’t tell me there’s not a currency war going on,” Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said in a posting on Twitter. He advised selling the yen.
The yen strengthened 0.1 percent to 98.26 per dollar as of 6:24 a.m. Sydney time and touched 97.63, the strongest since April 8. It had depreciated to 99.95 yen per dollar on April 11, the weakest level since April 2009. It advanced 0.1 percent to 128.84 per euro. The euro traded at $1.3112 from $1.3113 at the end of last week.
Bond Purchases
The Bank of Japan has doubled its monthly bond purchases to 7 trillion yen and set a two-year horizon for achieving its goal of 2 percent inflation as it seeks to revive the nation’s economy. Governor Haruhiko Kuroda said April 12 there’s no time limit to the central bank’s stimulus.
While Japan is facing international criticism for driving the yen down so rapidly, Kuroda and Prime Minister Shinzo Abe are pursuing policies their nation has been urged to carry out to end stagnation, according to Kenneth Rogoff, a former chief economist at the International Monetary Fund.
“It’s risky, that’s for sure, but this is what everyone, possibly even the Chinese, has been telling them to do for a very long time and finally they’re doing it,” Rogoff, an economics professor at Harvard University, said last week said in an interview with Tom Keene and Sara Eisen on Bloomberg Television’s “Surveillance.” “I do think this Mr. Kuroda understands that you can’t do this halfway. This is something you have to do fairly forcefully.”
Japan’s currency plunged 22 percent in the six months to April 12, the worst performer in among 10 developed-market peers tracked by Bloomberg Correlation-Weighted Indexes. That compares with a 4.2 percent slide in the next-worst performer, the pound, and a 0.8 percent appreciation in the dollar.
The yen has lost at least 6 percent against all of its 16 major peers tracked by Bloomberg this year.
G-20 Meeting
Global finance ministers, who will meet this week during the International Monetary Fund and World Bank spring meetings in Washington, signaled in February that Japan could stimulate its stagnant economy as long as policy makers refrained from publicly advocating a sliding yen.
Josef Ackermann, the former chief executive officer of Deutsche Bank AG who now chairs Zurich Insurance Group AG, said allowing the euro to fail would be more costly than deepening the region’s fiscal and political ties.
“The destruction of the euro system would be much more expensive than the further construction,” Ackermann said in an interview in Kuwait City on April 13. “We need a united Europe to negotiate at eye level with other major regions like the United States, China, India and some other countries.”
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