Japan Prepared To Sell Yen To Keep Currency Below 14 Year High Against Dollar

Tyler Durden's picture

The $ PET (Plunge Enforcement Team) will have its work cut out for it tonight and tomorrow, after speculation was rampant that both Japan and Switzerland would intervene in their respective currency markets to halt the dollar's collapse, in essence making Tim Geithner's self-proclaimed job of maintaining a strong dollar that much easier. And even as the Nikkei has terminally decoupled from the US equity market, and is now over 10% down from its 2009 highs, the yen just passed 85, hitting a 14 year high against the dollar and throwing Japan's export economy into a tailspin: that a confirmed deflationary economy is considered a "safe-haven" in today's world should be sufficient to get Keynes boogying to the foxtrot in his grave as his economic gospel falls apart at the seams.

Japan, which previously had said it is not concerned by the yen's onslaught, finally changed its tune and announced it was considering direct intervention, by selling yen in the FX markets. 

Japan’s currency pared some of its earlier gains after Finance Minister Hirohisa Fujii told reporters in Tokyo he will contact authorities in the U.S. and Europe about currencies if necessary. Shizuka Kamei, Japan’s financial services minister, also urged an international response to halt the rise in the country’s currency.

Kamei, speaking in Tokyo today, said he has asked Finance Minister Fujii to seek global cooperation on the yen.

The market showed some respect to a stronger warning from the government today and bought back the dollar,” said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. “The impact of verbal intervention will not last so long unless the government takes actual action.”

Japan hasn’t sold its currency since March 16, 2004, when it traded around 109 per dollar. The Bank of Japan sold 14.8 trillion yen ($172 billion) in the first three months of 2004, after record sales of 20.4 trillion yen in 2003. Japan last bought the currency in 1998, purchasing 3.05 trillion yen as the rate fell as low as 147.66.

The last thing the "invisible bid" needs is to wage a two-front war: one on the equities side courtesy of the excessive leverage dam finally bursting in a country that unlike the US does not share its facility with printing the reserve currency, and two, a dollar reversion trade. The culmination of the two, coupled with a little short covering panic in the dollar market, could present a major mandatory Aspirin consumption day for the fine traders at 33 Liberty tomorrow. We wish them best, as it is about that time in the night when the futures rise by about 25-50 bps for no reason at all. And with US consumers very much in tune with newsflow today, one should not be surprised if retailer expectation for a strong Black Friday are micturated upon as consumers keep an eye out on /ES into the midnight hour, to decide if that 4th plasma is really worth the 29.95% APR. 


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
order6102's picture

japan intervention will be nice start of endless run to devalue own currency... Japan first, Korea second, with other small guys to follow... Get me out from FIAT trade is on...

Unscarred's picture

Alright, here's the play...

There is absolutely nothing that the $-PET can do to keep Japan and Switzerland from causing a short-term correction, but be ready for a host of speeches from Federal Reserve Board members (including Chairman Bernanke) who will all reiterate not only the need for zero interest rate policies into 2012, but also hint towards their (obvious) grave concerns regarding the impending CRE bust.

To further drive the CRE threat home, they could really hammer the dollar by stating that they intend to somewhat reveal their hand regarding Fed policy towards handling the CRE bust in the coming weeks (perhaps after the next FOMC meeting), with measures including but not limited to additional potential quantitative easing measures.

(I say somewhat because the Fed doesn't have to reveal anything for people to sell dollars, they only have to allude to the possibility of doing so)

That should stop Japan and Switzerland in their tracks, as well as give daddy a fresh dollar low for the holidays.

Cindy_Dies_In_The_End's picture

yup, and this is all AFTER, The One, was over there bowing and scraping.


Ruh-Roh Shaggy.

arnoldsimage's picture

jeez... isn't it high time that this massive, global fraud get taken out to the woodshed and let the true laws of the economy reign.

Anonymous's picture

Gold prices proves this fraud.

Will the last American holding Federal Reserve Notes (dollars) please turn the lights out. Thank you.

Anonymous's picture

I've noticed with you religious people that you'll believe in anything.

Like an economy that has natural laws that are not the endgame of massive constant manipulation.

You can't sit on the sidelines forever Arnold. Come-on back buddy we'll let you win the first few trades.

Unscarred's picture

By the way, A&M just converted the 2-pointer after a pick-6 to pull within a field goal of #3 Texas early in the 4th.

spekulatn's picture


one should not be surprised if retailer expectation for a strong Black Friday are micturated upon as consumers keep an eye out on /ES into the midnight hour, to decide if that 4th plasma is really worth the 29.95% APR. 

The 4th plasma will make you a man, son.



The Big Lebowski: What makes a man, Mr. Lebowski? 
The Dude: Dude. 
The Big Lebowski: Huh? 
The Dude: Uhh... I don't know sir. 
The Big Lebowski: Is it being prepared to do the right thing, whatever the cost? Isn't that what makes a man? 
The Dude: Hmmm... Sure, that and a pair of testicles. 



The Big Lebowski: Are you surprised at my tears, sir? 
The Dude: [Smoking a joint] Dude, fuckin' A! 
The Big Lebowski: Strong men also cry... strong men also cry. 





tomdub_1024's picture

"micturated"  rofl!...after I looked it up...ZH daily adds to my vocabulary...:)

andrew123's picture

Can anyone comment on teh practical limitations of the BOJ intervening inteh forex market?  Why haven't they to date?  are they reluctant to do so because it will effect their ability to sell JGBs?

Anonymous's picture

Here is their second round of buying going off right now

Anonymous's picture

nearly 100 percent of the cds contracts on dubai debt contain restructuring clauses where such an event is a credit event. i think the dubai world thing is going to be magnified 100x. its not just the holders of the debt in trouble. of course, tehy might have netted out, but maybe not continuing this was somewhat out of the blue.

also, dubai world holds something like 25 percent of all british commercial real estate.

there is huge potential for systemic problems.

Anonymous's picture

get ready for a lollercaust tomorrow

lizzy36's picture

Well 12am est and DJ futures off 260,  S&P down 32 and Nasdq down 53.

I think something stronger than asprin may be required.

Reductio ad Absurdum's picture

Indeed. Mayhap a genuine "Black Friday" coming?

MinnesotaNice's picture

Well Lizzy... it's 3am est and the DJ futures are now off 319 points, S&P 41, and Nasdaq 67... should be an interesting Friday... wonder if this is the beginning of the 'dump' in the 'pump and dump' scheme... with Dubai as the trigger.

phaesed's picture

The yen blows my mind, especially versus the Euro, since it's been in a trading range, question is if the pattern breaks although there is a bullish butterfly forming on the daily, so there's good probability of a technical rebound for the next few days.... perhaps enough to get consumers to shop if they control the news flow in the states and Europe.

tom a taxpayer's picture

Japan lower house passes debt-moratorium bill


"Japanese Finance Minister Shizuka Kamei reportedly said that he will do his utmost to see the debt-moratorium bill quickly pass parliament, arguing that it would have a positive impact on firms as the end of the year approaches.

"I feel that we are one-fourth of the way there," Kamei said following the morning Cabinet meeting, according to the Nikkei business daily.

Kamei's plan has weighed on shares of Japanese banks in recent months."


Anonymous's picture

Silver & gold trading right in line with the stock market, what a surprise.

orange juice's picture

apparently there is a ripple effect as US futures are now off ~3% for all indices.

MsCreant's picture

Gold took a small nose dive.


faustian bargain's picture

yeah, wtf. Who's doing that.

MsCreant's picture

I could be in denial here but I am going to take a guess:

Unwinding shit hitting the fan, BAAAAD. Everyone needs cash now, thus the rush for the exit.

faustian bargain's picture

something's going on, that's for sure.

faustian bargain's picture

I wonder what the dollar is going to do tomorrow.

I wonder how many zigzags gold is going to take.

Assetman's picture

Yeah... volatility events can be a bit unpredicatable, can't they?

There will be concerted efforts to put the genie back into the bottle, in hopes to contain the unwinding.  Given a 2nd and 3rd country under severe sovereign CDS stress, the unwinding process will be difficult to stop.

It'll be interesting to get a peek at CA and USA CDS levels in the morning.

I'm sort of glad I took the day off.


MsCreant's picture

Good night or morning, Assetman,

I was thinking, it is one thing to lie and contain it in our own country (defaults they won't let happen, mark to fantasy), quite another to try to do so across countries. I can only hope this is an opening play for the truth telling to begin. If I took a loss on some "investing" I did, that really would be okay if sorting out and healing resulted. If there is truth telling and good faith, I think people can handle it (I am a dreamer, eh?).

Someone stepping up to bat with the truth now would be a hero or heroine. Just true. We could role model wonderful stuff for our kids. It is so sad, so may opportunities lost. Patriots, pioneers, immigrants, we have such a strong legacy. We could do better by embracing the disaster and leading.

I hope you can enjoy your day off.

Anonymous's picture

Gold has been rallying in concert with the stock market and now it's falling with the stock market. It's NOT a safe haven in deflationary liquidations.

depression's picture

shucks just when everyone believed gold was going to $5000.... imagine that

Anonymous's picture

Where's GG anyway? Still swinging a big dick with all those "fuckloads" of gold & silver he's been buying?

mock turtle's picture

i am truly scared shitless

i starting to wonder if its gonna be even worse than i feared

while i respect the desire of any people of a nation to issue and control their own currency

i cant understand how there can be free trade on a planet...few or no tariffs, labor and resource arbitrage

yet a pack of individual, separate, manipulated currencies

imagine what all 50 states issuing each their own currency and the games that could be played manipulating and speculating their rise and fall with respect to each other

the way it is organized this free trade thing looks more and more like a suicide pact

Anonymous's picture

True. It may be time for the men to be separated from the boys and girls.

But then again they are only looking to defer debt payments of $US60bn. A semi-default if you will, a possible request for bids or RFP's.

The US donates $7.0 million a day to Israel*.
* http://www.ifamericansknew.org/stats/usaid.html

We could cover that debt, easy. Then end up owning Dubai. An excellent place for a new luxury military base. Maybe Barack could get Puff Daddy funding for this deal?

This will just turn out to be a good distressed buying opportunity for a large multinational, or SWF.

Neophiliac's picture

This is starting to look more and more like Armaggeddon 2.0. Dollar plunging, but look at Nikkei (300pts off), Hang Seng (900 pts off) and Shanghai Comosite (a mere 78 pts off).  Can't wait for the bloodbath in NYSE on monday - I'd say the odds of another "technical glitch" - to prevent an outright collapse as US markets rush to do in 1 day what Europe and Asia had done in 2 - are pretty good.

In other news, even Krugman now thinks that Timmy G is on wall street's payroll.  See here: http://www.nytimes.com/2009/11/27/opinion/27krugman.html and here: http://elevend.blogspot.com/

Cindy_Dies_In_The_End's picture

krugman is a tool and why his name even comes up as a joke on this site is a waste of everyone's time. What a fraktard.

Anonymous's picture

I like gravy on my turkey

Anonymous's picture

Being an FX trader, I DREAM for gifts like that. I bought that dip with aggression and size and it was the easiest, most risk-free trade I have ever seen. It's all coming clear to me now; I am actually blessed to have been born into such a crazy family and felt the need to leave T-giving dinner so early and arrive home to that yen volatility. There is a God after all!

Anonymous's picture

I've heared that finance minister Fujii has a strong view that the Yen appreciation will make Japanese exporters throwing into improvement themself. And ruling Democratic Party can't change their policy stance that from relying exporters, which favour in former LDP, to domestic consumption picking. They want to show vivid policy change from LDP course in nationwide for the sake of winning upper house election next summer.

There is no value for FRB or ECB to give Japan virtue to prevent yen appreciation. It's unhappy for us (Japanese) and feel dive into hell down and down through time by time...