Japan Economy Minister: "Yen's Excessive Strength Has Been Largely Corrected; Further Weakness Could Be Harmful"
As if sniffing at the threat the ongoing collapse in JGBs, culminated by Toyota pulling a bond issue on soaring yields, which forced even JPM to come out with an ominously titled piece called the "VaR Shock" driven by the epic plunge in the Yen, Japan's economy minister Akira Amari has hit the wires saying "the yen's excessive strength has been largely "corrected," and further weakness could be harmful, Japan's economy minister said Sunday, suggesting the Japanese government may be happy with the currency's current level. Economy minister Akira Amari, responding to a question on how far the yen should weaken, replied that while he couldn't comment himself, "it's being said that the correction of the strong yen is largely completed. If the yen keeps on weakening a lot more, it will have a negative impact on peoples' lives."" Now the question is will those millions in Mrs. Watanabe housewives suddenly stuck in margin calls scramble to take profit, which could send the USDJPY soundly back into double digit territory, or will the momentum machine, facilitated by Getco's relentless scramble to perpetuate momentum ignition and drift, mean Japan has officially lost control of the Yen, and in a world in which only the BOJ's actions matters, will USDJPY 120 be next, together with the even greater "negative impact on people's lives" such a move would have (but not for those buying apartments at the yet to be built 432 Park).
Mr. Amari was speaking on a Sunday television talk show on national broadcaster NHK.
His comments come after the dollar appreciated past Y103 for the first time in four years Friday, marking a 3% gain in the past week alone, and a 30% rise since mid-November, when Prime Minister Shinzo Abe started his successful campaign for office on a pro-growth, weak-yen platform.
Mr. Abe and his ministers had argued that the yen had been too strong versus currencies like the dollar and euro since the global financial crisis sent the currency soaring in 2008, pummeling Japan's big exporters, which found their Japan-made goods suddenly much costlier in the world's markets. "Correcting" that problem -- as Mr. Abe and his cohorts put it -- was an important goal of the government's economic growth policies, which called for aggressive monetary easing, fiscal spending and deregulation.
But the last several months' depreciation has left the yen near pre-crisis levels, and Mr. Amari's remarks suggest that the government may now be switching its concerns to what would happen if the yen continues to weaken. Although a weak yen boosts profits at exporters, it also raises the cost of imports -- most notably fuel, which Japan has been buying in increased amounts since Japan's 2011 nuclear accident effectively halted operation of most of the country's nuclear power plants.
If a weakening yen does have a negative impact on living costs, "it's our job to figure out how to minimize that," Mr. Amari also said. As examples, Mr. Amari touched on the possibility of importing shale gas from the U.S. and restarting nuclear reactors.
Mr. Amari also sounded a cautious note on Japan's surging stock market, which has jumped 45% so this year, largely on the weakening yen and hopes that depreciation will boost the fortunes of big Japanese manufacturers. Last week the benchmark Nikkei 225 Stock Average breached 15,000 for the first time in over five years.
The stock rise "has been a bit faster than we'd expected," said Mr. Amari.
You mean a central planner could not correctly anticipate what would happen when the latest and greatest Pandora's box of asset bubbles is opened? Surely that's would be a first: as long as the "USDJPY is contained" all is well.
Perhaps Kuroda also just needs 15 minutes of jawboning to put the inflation genie back into the bottle.
Good luck with that.
And good luck turning the epic momentum juggernaut around: you will need it. Unless of course the even more epic short covering the may be unleashed takes the USDJPY lower by some 20-30 big figures, and Abenomics quickly ends where it started: with yet another Prime Minister resignation, and the central-planning emperor is found to have been naked all over again.
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