March 18 (Bloomberg) -- The yen fell the most since 2008 against the dollar, the Nikkei 225 Stock Average pared its weekly drop and U.S. index futures climbed after central banks intervened to weaken Japan’s currency. Oil rallied.
The yen sank 3.6 percent to 81.87 per dollar as of 4 p.m. in Tokyo and Japanese government bonds slid. The Nikkei 225 rose 2.7 percent, trimming its biggest weekly slump in more than two years. The MSCI Asia Pacific excluding Japan Index climbed 1.3 percent. Standard & Poor’s 500 Index futures added 0.7 percent. Those on the Euro Stoxx 50 Index increased 0.8 percent. Oil rose 1.5 percent in New York as the United Nations Security Council voted to ground Libyan leader Muammar Qaddafi’s air force.G-7 nations started joint intervention in the foreign exchange market for the first time in more than a decade after the yen soared to a post-World War II high, threatening Japan’s recovery from the record March 11 earthquake. Power may be restored to one of the crippled reactors at Tokyo Electric Power Co.’s Fukushima nuclear plant this afternoon, improving the odds that workers can prevent a meltdown and further radiation leaks.
“This is an extreme measure; coordinated intervention doesn’t happen often,” Kirby Daley, a Hong Kong-based senior strategist with Newedge Group’s prime brokerage business, said in a Bloomberg Television interview. “They’re coming in and they’re using the yen as a tool to keep stability in the Japanese equity markets.”
The yen, which soared to 76.25 per dollar yesterday, declined against all 16 of its most actively-traded peers. The currency fell 4 percent to 115.17 per euro. The Bank of Japan added 3 trillion yen ($37 billion) to the financial system in a one-day operation today, bringing its total emergency fund injections this week to 37 trillion yen.
‘Concerted Intervention’
“In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the U.S., the U.K., Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets,” the G-7 said today in a statement.
Yields on Japan’s benchmark 10-year bonds added one basis point to 1.21 percent, rebounding from near the lowest level in two months. Treasuries fell, sending the yield on the benchmark 10-year note higher by three basis points to 3.29 percent. A basis point is 0.01 percentage point.
“One effect of joint intervention is that it gives calmness or stability to the market so the risk premium should fall,” said Satoshi Okumoto, who helps oversee the equivalent of $67.1 billion as a general manager at Fukoku Mutual Life Insurance Co. in Tokyo. “The flight to quality in terms of U.S. Treasuries should be weakened.”
Tepco Plant
Five-year credit-default swaps on Japan’s sovereign debt decreased 13 basis points to 104.5 basis points after climbing to a record 130 yesterday, according to Citigroup Inc. The Markit iTraxx Japan index of corporate borrowers fell 21 basis points to 129, its biggest drop since May 26, according to Citigroup and data provider CMA in New York.
Contracts insuring Tokyo Electric’s debt against default dropped 60 basis points to 305, according to Royal Bank of Scotland Group Plc. Shares of Tepco, as the company is known, climbed 19 percent after tumbling 62 percent in the first four days of this week.
Tepco said it will finish reconnecting a power line to the cooling system of the No. 2 reactor today, where white smoke or steam was observed. The power link would be used to restart pumps needed to pour cooling water on overheating fuel rods. Radiation levels have declined to safe levels for workers, Japanese government spokesman Yukio Edano said.
Weekly Slump
About 15 stocks gained for each that fell on the Nikkei 225 as the gauge dropped 10 percent this week, the steepest since the period ended Oct. 24, 2008. MSCI’s index of Asian markets outside Japan fell 1.6 percent this week, while the MSCI World Index dropped 2.7 percent, the biggest weekly loss in seven months. Declines in the first three days of this week wiped more than $1.8 trillion from global equity markets.
Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, rallied 3.6 percent as oil prices rose. PetroChina Co., the world’s second-biggest company by value, gained 2.1 percent in Hong Kong after it reported a 35 percent climb in profit last year, beating analyst estimates.
Oil rose to $102.89 a barrel in New York, set for a third day of gains. Brent crude increased 0.9 percent to $115.95 a barrel in London after the UN voted to adopt a resolution that establishes a no-fly zone over Libya, that demands a cease-fire with rebels and that grants military authority to the U.S. and its allies to protect civilians and population centers.
Tightening Supply
“It may result in the UN having to take military action against Qaddafi and the prospect of that is not good for a peaceful resolution,” said Ben Westmore, a minerals and energy economist for National Australia Bank Ltd. in Melbourne. “The prospect of supply tightening is keeping a floor under oil prices.”
Qaddafi’s jets dropped bombs around Benghazi yesterday while security forces in Bahrain arrested opposition leaders after more than a month of Shiite-led protests calling for democracy and increased human rights.
Corn for May delivery paced an advance among grains today, rising 3 percent to $6.66 a bushel. Wheat futures jumped 3.1 percent to $7.3250 a bushel. The S&P/GSCI Index of 24 commodities advanced 1.1 percent after soaring 3.4 percent yesterday, the biggest one-day jump since September 2009.
--With assistance from Susan Li in Hong Kong, Yusuke Miyazawa and Yoshiaki Nohara in Tokyo, Katrina Nicholas in Singapore, Ben Sharples in Melbourne and Candice Zachariahs in Sydney. Editor: Will McSheehy
To contact the reporter on this story: Shiyin Chen in Singapore at schen37@bloomberg.net.
To contact the editor responsible for this story: Will McSheehy at wmcsheehy@bloomberg.net.
Jumat, 18 Maret 2011
G-7 Sells Yen in First Joint Intervention in More Than Decade
G-7 Sells Yen in First Joint Intervention in More Than Decade
By Toru Fujioka and Mayumi Otsuma - Mar 17, 2011
The Group of Seven will jointly intervene in the foreign exchange market for the first time in more than a decade after Japan’s currency soared, threatening its recovery from the March 11 earthquake.
Japan began the effort, sending the currency down 3.1 percent against the dollar at 9:34 a.m. in Tokyo. Each of the G-7 members will sell yen as their markets open, Japan’s Finance Minister Yoshihiko Noda told reporters in Tokyo today. The G-7 said in a joint statement after a conference call of its finance ministers and central bank chiefs that it will “provide any needed cooperation” with Japan.
Japan’s central bank also said in a statement that it will pursue “powerful monetary easing” as policy makers sought to reduce the threat the world’s third-largest economy sinks into a recession. The Nikkei 225 (NKY) Stock Average gained after the announcements, paring losses to 12 percent since the quake and ensuing tsunami killed thousands and led to rolling blackouts and radiation leaks at a nuclear plant. “It will be supportive for the economy if they can manage to stabilize the yen,” said Thomas Harr, Singapore- based head of Asian foreign-exchange strategy at Standard Chartered Plc. “You will have better chance of succeeding when you have the joint intervention rather than just Bank of Japan.”
Japan Asked
The G-7 said in its statement that “in response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities” it will intervene in the currency market today. “We will monitor exchange markets closely and will cooperate as appropriate,” the statement said.
Against the dollar, the yen was at 81.39, while it slid 2.8 percent versus the euro to 113.80. The Nikkei 225 rose 2.9 percent.
A stronger exchange rate threatened to hamper Japan’s recovery from its worst postwar crisis by curtailing the earnings of its exporters.
French Finance Minister Christine Lagarde, whose nation chairs the group, said two days ago she wanted to hold G-7 talks on the financial response to the catastrophe, including possibly buying Japanese bonds. The G-7 is made up of the U.S., Germany, France, Canada, Italy, the U.K. and Japan.
First Since 2000
G-7 members hadn’t entered the market together since September 2000, when they sought to buoy the euro as it tumbled in its second year of existence. The U.S. Treasury’s participation was its first since September 2000, ending the longest period of American inaction in foreign-exchange markets since at least 1973, according to department figures.
In 2000 current Treasury Secretary Timothy F. Geithner was then the department’s undersecretary for international affairs.
Japan had called on the group to issue a statement in October 2008, when the global financial crisis drove the yen near a 13-year high against the dollar. They responded by expressing concern about “excessive” volatility, stopping short of indicating any intervention. Japan’s government didn’t step into currency markets until Sept. 15 last year.
Break-Even Point
Japan’s exporters say they can remain profitable as long as the yen trades at 86.30 per dollar or weaker, compared with the previous year’s breakeven point at 92.90, an annual Cabinet Office survey showed on March 11.
At the same time, companies from Sony Corp. to Toyota Motor Co. have already halted some domestic operations because of the earthquake, reducing the need for policy makers to step in to weaken the yen, according to Azusa Kato, an economist at BNP Paribas SA in Tokyo.
The Bank of Japan has been pouring cash into the financial system to stabilize money markets and on March 14 doubled an asset-purchase fund to 10 trillion yen, pledging to step up purchases of securities including government debt, exchange-traded funds and real-estate investment trusts.
Noda and Economic and Fiscal Policy Minister Kaoru Yosano sought to quell speculation driving the yen higher yesterday. Noda said markets were nervous and Yosano said there was no basis for an argument that the nation’s insurance companies were repatriating foreign assets to pay for earthquake damage.
Repatriation Concern
“The speculation was that Japanese life and casualty insurers will repatriate dollar-denominated assets to secure funds in the wake of the earthquake,” Yosano told reporters in Tokyo yesterday. “But they have ample cash, deposits and other liquid assets,” he said, adding that the Financial Services Agency and Bank of Japan have confirmed insurers aren’t selling their dollar assets.
Shirakawa said on March 13 that he was prepared to unleash “massive” liquidity to secure stability, a commitment followed up the next day with a record 15 trillion yen in one-day cash, with injections diminishing since then.
To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
By Toru Fujioka and Mayumi Otsuma - Mar 17, 2011
The Group of Seven will jointly intervene in the foreign exchange market for the first time in more than a decade after Japan’s currency soared, threatening its recovery from the March 11 earthquake.
Japan began the effort, sending the currency down 3.1 percent against the dollar at 9:34 a.m. in Tokyo. Each of the G-7 members will sell yen as their markets open, Japan’s Finance Minister Yoshihiko Noda told reporters in Tokyo today. The G-7 said in a joint statement after a conference call of its finance ministers and central bank chiefs that it will “provide any needed cooperation” with Japan.
Japan’s central bank also said in a statement that it will pursue “powerful monetary easing” as policy makers sought to reduce the threat the world’s third-largest economy sinks into a recession. The Nikkei 225 (NKY) Stock Average gained after the announcements, paring losses to 12 percent since the quake and ensuing tsunami killed thousands and led to rolling blackouts and radiation leaks at a nuclear plant. “It will be supportive for the economy if they can manage to stabilize the yen,” said Thomas Harr, Singapore- based head of Asian foreign-exchange strategy at Standard Chartered Plc. “You will have better chance of succeeding when you have the joint intervention rather than just Bank of Japan.”
Japan Asked
The G-7 said in its statement that “in response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities” it will intervene in the currency market today. “We will monitor exchange markets closely and will cooperate as appropriate,” the statement said.
Against the dollar, the yen was at 81.39, while it slid 2.8 percent versus the euro to 113.80. The Nikkei 225 rose 2.9 percent.
A stronger exchange rate threatened to hamper Japan’s recovery from its worst postwar crisis by curtailing the earnings of its exporters.
French Finance Minister Christine Lagarde, whose nation chairs the group, said two days ago she wanted to hold G-7 talks on the financial response to the catastrophe, including possibly buying Japanese bonds. The G-7 is made up of the U.S., Germany, France, Canada, Italy, the U.K. and Japan.
First Since 2000
G-7 members hadn’t entered the market together since September 2000, when they sought to buoy the euro as it tumbled in its second year of existence. The U.S. Treasury’s participation was its first since September 2000, ending the longest period of American inaction in foreign-exchange markets since at least 1973, according to department figures.
In 2000 current Treasury Secretary Timothy F. Geithner was then the department’s undersecretary for international affairs.
Japan had called on the group to issue a statement in October 2008, when the global financial crisis drove the yen near a 13-year high against the dollar. They responded by expressing concern about “excessive” volatility, stopping short of indicating any intervention. Japan’s government didn’t step into currency markets until Sept. 15 last year.
Break-Even Point
Japan’s exporters say they can remain profitable as long as the yen trades at 86.30 per dollar or weaker, compared with the previous year’s breakeven point at 92.90, an annual Cabinet Office survey showed on March 11.
At the same time, companies from Sony Corp. to Toyota Motor Co. have already halted some domestic operations because of the earthquake, reducing the need for policy makers to step in to weaken the yen, according to Azusa Kato, an economist at BNP Paribas SA in Tokyo.
The Bank of Japan has been pouring cash into the financial system to stabilize money markets and on March 14 doubled an asset-purchase fund to 10 trillion yen, pledging to step up purchases of securities including government debt, exchange-traded funds and real-estate investment trusts.
Noda and Economic and Fiscal Policy Minister Kaoru Yosano sought to quell speculation driving the yen higher yesterday. Noda said markets were nervous and Yosano said there was no basis for an argument that the nation’s insurance companies were repatriating foreign assets to pay for earthquake damage.
Repatriation Concern
“The speculation was that Japanese life and casualty insurers will repatriate dollar-denominated assets to secure funds in the wake of the earthquake,” Yosano told reporters in Tokyo yesterday. “But they have ample cash, deposits and other liquid assets,” he said, adding that the Financial Services Agency and Bank of Japan have confirmed insurers aren’t selling their dollar assets.
Shirakawa said on March 13 that he was prepared to unleash “massive” liquidity to secure stability, a commitment followed up the next day with a record 15 trillion yen in one-day cash, with injections diminishing since then.
To contact the reporters on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net
Rabu, 16 Maret 2011
Workers briefly abandon Japan plant after radiation surge
Just hours earlier another fire broke out at the earthquake-crippled plant, which has sent low levels of radiation wafting into Tokyo in the past 24 hours, triggering both fear in the capital and international alarm.
The workers were allowed back into the plant after almost an hour when the radiation levels had fallen.
Japan's chief government spokesman said it was "not realistic" to think the Daiichi nuclear plant in Fukushima, 240 kms (150 miles) north of Tokyo, would reach the start of a nuclear chain reaction, but said officials were talking to the U.S. military about possible help.While public broadcaster NHK said flames were no longer visible at the building housing the No.4 reactor of the plant, TV pictures showed smoke or steam rising from the facility around 0100 GMT.
Academics and nuclear experts agree that the solutions being proposed to contain damage to the reactors are last-ditch efforts to stem what could well be remembered as one of the world's worst industrial disasters.
"This is a slow-moving nightmare," said Dr Thomas Neff, a research affiliate at the Center for International Studies, which is part of the Massachusetts Institute of Technology.
Concern had earlier been mounting that the skeleton crews dealing with the crisis might not be big enough, or were possibly exhausted after working for days since last Friday's massive earthquake damaged the facility. Authorities had withdrawn 750 workers on Tuesday, leaving only 50.
The plight of hundreds of thousands left homeless by the quake and devastating tsunami that followed worsened overnight following a cold snap that brought snow to some of the worst-affected areas.
While the official death toll stands at around 4,000, more than 7,000 are listed as missing and the figure is expected to rise.
In the first hint of international frustration at the pace of updates from Japan, Yukiya Amano, director general of the International Atomic Energy Agency, said he wanted more timely and detailed information.
"We do not have all the details of the information so what we can do is limited," Amano told a news conference in Vienna. "I am trying to further improve the communication."
Several experts said that Japanese authorities were underplaying the severity of the incident, particularly on a scale called INES used to rank nuclear incidents. The Japanese have so far rated the accident a four on a one-to-seven scale, but that rating was issued on Saturday and since then the situation has worsened dramatically.
France's nuclear safety authority ASN said Tuesday it should be classed as a level-six incident.
Japanese Prime Minister Naoto Kan on Tuesday urged people within 30 km (18 miles) of the facility -- a population of 140,000 -- to remain indoors, as authorities grappled with the world's most serious nuclear accident since the Chernobyl disaster in Ukraine in 1986.
Technical analytics
UER/USD Pivot: 1.3955 R1 : 1.4055 S1: 1.3896 S2 : 1.3796
S3:1.3737
GBP/USD Pivot : 1.6081 R1: 1.6185 R2 : 1.6289 S1 : 1.5977 S2 : 1.5873
USD/CAD Pivot : 0.9853 R1: 1.9971 R2 : 1.0091 S1 : 0.9733 S2 ; 0.9615
USD/JPY Pivot : 81.13 R1: 81.65 R2 : 8254 S1 : 80.24 S2 : 79.72
USD/CHF Pivot : 0.9184 R1: 0.9229 R2 : 0.9299 S1 : 0.9119 S2 : 0.9074
AUD/USD Pivot : 0.9938 R1: 1.0060 R2 ; 1.0229 S1 : 0.9769 S2 ; 0.9647
S3:1.3737
GBP/USD Pivot : 1.6081 R1: 1.6185 R2 : 1.6289 S1 : 1.5977 S2 : 1.5873
USD/CAD Pivot : 0.9853 R1: 1.9971 R2 : 1.0091 S1 : 0.9733 S2 ; 0.9615
USD/JPY Pivot : 81.13 R1: 81.65 R2 : 8254 S1 : 80.24 S2 : 79.72
USD/CHF Pivot : 0.9184 R1: 0.9229 R2 : 0.9299 S1 : 0.9119 S2 : 0.9074
AUD/USD Pivot : 0.9938 R1: 1.0060 R2 ; 1.0229 S1 : 0.9769 S2 ; 0.9647
Senin, 14 Maret 2011
Bank of Japan braced to stabilize markets
By Michiyo Nakamoto, FT.com
March 13, 2011 -- Updated 1646 GMT (0046 HKT)
Tokyo (FT) -- The Bank of Japan will act quickly to stabilize the markets and the banking system when its monetary board meets on Monday.
Bank of Japan Governor Masaaki Shirakawa said on Sunday the central bank would provide huge amounts of liquidity to the banking system, reinforcing the bank's determination to keep markets stable in the wake of the devastating earthquake that struck northeastern Japan.The BoJ is likely to provide Y2000bn-Y3000bn ($24.4bn-$36.6bn) in funds through its market operations Monday morning, two to three times the normal amount, to soothe markets and keep short-term borrowing costs from spiking, Reuters reported.
Economics Minister Kaoru Yosano said the government would fight decisively against speculative moves and would not tolerate short selling to take advantage of the quake."We will monitor market conditions and plan to provide markets with a lot of liquidity first thing tomorrow morning," Shirakawa said after attending a meeting of cabinet ministers.
The central bank's first priority is to ensure banks in the worst-affected regions do not run out of cash by extending loans at favorable conditions.
Over the weekend it provided Y55bn ($671.5mn) in funds to financial institutions in quake-struck northern Japan.
The Japanese government faces an enormous challenge coming up with funds to finance the massive rescue and rebuilding efforts that will be required in the aftermath of the disaster.
Japan's public debt is approaching 200 percent of gross domestic product and the government has called for an increase in the consumption tax to offset falling tax revenues.
Before the earthquake hit the country, the ruling Democratic party of Japan had been struggling to pass bills related to the 2011 budget.
The government will put together an emergency supplementary budget, as it has done many times in the past to deal with crises.
Finance minister Yoshihiko Noda on Saturday appealed to opposition parties to co-operate in first passing the budget for fiscal 2011, after which the government aims to pass a supplementary budget to help rebuild the country.
Mr. Noda said the government had just Y200bn ($2.4bn) in reserve funds for 2010 and, together with Prime Minister Naoto Kan, called for a supplementary budget to help severely destroyed areas and help people affected by the crisis to rebuild their lives.
Although the central bank is not expected to cut its policy rate, which it has cut to a historic low of zero, in order to combat deflation, it is likely to signal its readiness to ease monetary policy to ensure damage from the quake does not threaten the country's fragile economic recovery.
Takahide Kiuchi, economist at Nomura, said the BoJ was likely to increase its asset-buying program from about Y5,000bn ($61bn) to between Y8,000bn ($97.6bn) and Y10,000bn ($122bn).
In an attempt to support economic activity, the BoJ has been buying assets, including real estate investment trusts.
The economic impact of the latest disaster to hit Japan is widely expected to be as severe, or worse, than that following the Hanshin-Awaji earthquake, which devastated Kobe and the city's surrounding region.
At that time, the government put together emergency spending packages totaling Y3,000bn ($36.6bn), notes Mr. Kiuchi.
© The Financial Times Limited 2011
March 13, 2011 -- Updated 1646 GMT (0046 HKT)
Tokyo (FT) -- The Bank of Japan will act quickly to stabilize the markets and the banking system when its monetary board meets on Monday.
Bank of Japan Governor Masaaki Shirakawa said on Sunday the central bank would provide huge amounts of liquidity to the banking system, reinforcing the bank's determination to keep markets stable in the wake of the devastating earthquake that struck northeastern Japan.The BoJ is likely to provide Y2000bn-Y3000bn ($24.4bn-$36.6bn) in funds through its market operations Monday morning, two to three times the normal amount, to soothe markets and keep short-term borrowing costs from spiking, Reuters reported.
Economics Minister Kaoru Yosano said the government would fight decisively against speculative moves and would not tolerate short selling to take advantage of the quake."We will monitor market conditions and plan to provide markets with a lot of liquidity first thing tomorrow morning," Shirakawa said after attending a meeting of cabinet ministers.
The central bank's first priority is to ensure banks in the worst-affected regions do not run out of cash by extending loans at favorable conditions.
Over the weekend it provided Y55bn ($671.5mn) in funds to financial institutions in quake-struck northern Japan.
The Japanese government faces an enormous challenge coming up with funds to finance the massive rescue and rebuilding efforts that will be required in the aftermath of the disaster.
Japan's public debt is approaching 200 percent of gross domestic product and the government has called for an increase in the consumption tax to offset falling tax revenues.
Before the earthquake hit the country, the ruling Democratic party of Japan had been struggling to pass bills related to the 2011 budget.
The government will put together an emergency supplementary budget, as it has done many times in the past to deal with crises.
Finance minister Yoshihiko Noda on Saturday appealed to opposition parties to co-operate in first passing the budget for fiscal 2011, after which the government aims to pass a supplementary budget to help rebuild the country.
Mr. Noda said the government had just Y200bn ($2.4bn) in reserve funds for 2010 and, together with Prime Minister Naoto Kan, called for a supplementary budget to help severely destroyed areas and help people affected by the crisis to rebuild their lives.
Although the central bank is not expected to cut its policy rate, which it has cut to a historic low of zero, in order to combat deflation, it is likely to signal its readiness to ease monetary policy to ensure damage from the quake does not threaten the country's fragile economic recovery.
Takahide Kiuchi, economist at Nomura, said the BoJ was likely to increase its asset-buying program from about Y5,000bn ($61bn) to between Y8,000bn ($97.6bn) and Y10,000bn ($122bn).
In an attempt to support economic activity, the BoJ has been buying assets, including real estate investment trusts.
The economic impact of the latest disaster to hit Japan is widely expected to be as severe, or worse, than that following the Hanshin-Awaji earthquake, which devastated Kobe and the city's surrounding region.
At that time, the government put together emergency spending packages totaling Y3,000bn ($36.6bn), notes Mr. Kiuchi.
© The Financial Times Limited 2011
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