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Japan Was Forced to Pay for the Debt Crisis



n late August is undoubtedly the most eye-catching Japanese yen currency. August 24, the dollar / yen refresh the 15-year low of 83.57 reached, after the trend began to wave rally, as investors worried that the Bank of Japan intervention admission profits, but the Bank of Japan really began after the intervention, The yen's rally but failed.

Money is like a country's blood. A country needs is a stable currency like the same people need a stable blood pressure. Once the sharp currency fluctuations will produce harm to this country, just as if a person's blood pressure than the big fluctuations will harm the human body the same. A country's currency is too strong or weak will produce harm on the country such as hypertension and hypotension on the human body are bad.

The current global stock market drop in risk aversion in the market one after another. And the yen as currency hedging by the large numbers of investors of all ages. Yen as swift as the way up. U.S. dollar / yen hit in August 24 low of 83.57 after 15 years, has appreciated against the dollar during the year of 9%, 22% against the euro. Government of Japan since March 2004 has never intervened since the yen, then the dollar / yen has been located near the level of 109.00.

Yen's strength, not because the health of Japan's economy is particularly strong, but because of the decline in global stock markets allowing investors to have to choose the yen. In my view, the yen's strength is forced. Another, the Japanese eating times Yaba Kui, the yen was "betrayal".

Taking into account the strong Japanese yen has been serious damage to the interests of exporters in Japan, so the first time the Bank of Japan wanted to co-bank foreign exchange market intervention in the U.S. and Europe. Then the European Central Bank has launched a joint intervention operations euro, the Japanese also participated. When the Japanese hearts and hope to expect to be involved with Europe and the United States co-sponsored intervention in the yen and its actions. Can be the source of the debt crisis - Europe is "readily" to oppose this action, which makes the Bank of Japan had to unilateral intervention against the yen.

Depressed Bank of Japan on August 30 an emergency meeting, it was decided to expand the scale of its financing tool supply, except in December 2009 provided from the 3-month low-interest loans, the central bank will begin to provide 10 trillion yen 6-month low-interest loans. As a result, domestic financial institutions government bonds and corporate debt can be secured from the central bank to borrow a total of 30 trillion yen, the longest period of up to 6 months of funding. Bank of Japan also decided to maintain the benchmark interest rate unchanged at 0.10%.

However, the Bank of Japan announced the easing in policy in the yen did not fall, because investors expect too much from the Bank of Japan. The stronger yen is likely to continue in the future, from August 30 the daily chart, the investors do not agree with the Bank of Japan interventions. But there is a reason to continue to be strong yen is the world's stock markets continued to decline. Dow hovered at 10,000 points, while the Nikkei was walking near the 9000. As the global economic slowdown makes the market rise in risk aversion, I think the Dow Jones index may have the opportunity to test a low point around 8500, while the Nikkei may have the opportunity to test a low near 7500. The dollar / yen is the key support of 83.50, below the likely event would test a low to 80.00.

Finally, I would like to mention a strong yen makes Japanese exporters in the international market, the competitiveness of the damage. On the other hand, Europe and the United States this does not help Japan's exporters will make Europe's competitiveness in international markets has been to ensure that, in turn will promote economic growth in Europe and the United States. The Japanese and the Japanese yen was a "betrayal", and Europe and the United States with "betraying" the interests of Japan in exchange for their interests. Japan is now for this debt crisis "pay."
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Article Added on Monday, February 13, 2012
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