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Japan props up dollar for first time since 2004


Japan props up dollar for first time since 2004


Japan has intervened in the currency markets for the first time in six years, selling the yen to buy dollars. It follows a surge in the value of the Japanese currency to a 15-year peak which was spooking business leaders worried about its effects on exports.

The yen has risen by more than 11 percent since May; time to take action said Finance Minister Yoshihiko Noda:

“We’ve just intervened in the currency market to avoid rapid foreign exchange rate moves. We will take decisive steps if necessary, including intervention, while continuing to closely watch currency market moves from now on.”

Next in the spotlight will be China. The dollar is too cheap compared to the Yuan complains America, and Congress meets on Wednesday night to decide if it is to try and force the Chinese to intervene on the money markets. But the World Bank president is urging caution on Capitol hill. China abandoned a two-year peg to the dollar in June, and has restricted rises to less than two percent since.

“I share the view that the IMF has expressed that it would be appropriate to have an appreciation of the currency. But my point is, it’s not a panacea. The structural issues are the fundamental issues that have to be addressed,” said Robert Zoellick.

In effect a cheap Yuan means, say many in the US, that Beijing’s currency policy is subsidising exporters, and at odds with China’s WTO membership. With the Yuan hitting a new high today, the odds on China being branded a currency manipulator are shortening.

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