Has a New 'Mr. Yen' Surfaced?FX OutlookJanuary 19, 2010 Posted by Scott Petruska Read More0 Comments
On January 7 of this year, the day after his appointment as Japan's finance minister, Naoto Kan stated that there was a need for the yen to weaken in order to help Japanese exporters. The markets did not treat this statement lightly, for it effectively reverses the long-held position of his predecessor, Hirohisa Fujii, of allowing the value of the yen to be determined solely by market forces. Fujii-san had resigned earlier in the week due to ill health. Kan explained that he "must work with the Bank of Japan to bring the yen to appropriate levels given its impact on the economy" and that "many Japanese firms favor yen at around ¥95." The currency markets were caught completely off guard by his comments and responded by selling the yen in a panic, driving it lower by more than half a yen vs. the dollar -ultimately to ¥93.77, its lowest level versus the dollar since last August.
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