Trump presidency won’t change Japan forex policy
Japan’s top currency diplomat Masatsugu Asakawa said there will be no change to Japan’s currency policy after US president-elect Donald Trump forms his administration, the
Nikkei newspaper reported yesterday.
Japan guides exchange-rate policy based on an agreement among the Group of Seven advanced economies that highly volatile currency fluctuations are undesirable for the economy, a stance that won’t change after Trump becomes president, Nikkei quoted Asakawa as saying. Asakawa said Trump’s stance on exchange rates was still unclear as his remarks suggested he was looking at both the costs and benefits of a strong dollar to the US economy, Nikkei said.
The dollar has strengthened against the yen since Trump was elected president and US Treasury yields spiked on expectations that the new administration would boost debt- funded infrastructure spending. Trump has repeatedly criticized Japan and China for currency policies that give their exports an unfair trade advantage, reinforcing market expectations that Japan won’t get consent from the US to intervene in the currency market to stem any future, unwelcome yen rises.
Meanwhile, most Asian stock markets fell yesterday as upbeat economic data strengthened the prospect for higher US interest rates, while the dollar’s bull run continued with US bond yields propelled to multi-year highs.
Japanese stocks swam against the tide and rose to a near 11-month high as the yen weakened.
Spreadbetters saw a mixed opening for European stocks, forecasting a slightly lower open for Britain’s FTSE, a marginally higher open for Germany’s DAX and a flat start for France’s CAC.
The dollar index against major currencies rose 0.1 percent to 101.78, not far from a 13-1/2-year high of 101.91 touched overnight.
The greenback drew support from a further rise in US Treasury yields.
The two-year yield hit its highest levels since April 2010 on Wednesday on further bets the Trump administration will increase debtfunded spending and spur growth and inflation.
Such a view – which has also lifted expectations for more US rate hikes next year – was reinforced on Wednesday after new orders of US manufactured capital goods rebounded in October. Consumer sentiment also jumped in November.
“It (the US dollar) is a freight train that seems over limit at the moment, but it may have a long way to go before what looks and feels like a structural adjustment settles down,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
State banks or foreign exchange authorities in China, India, Indonesia and the Philippines were all suspected of intervening to slow the slide in their currencies yesterday.