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  • Abe adviser: Yen at 105 is appropriate given purchasing power parity

    From forexlive.com

    The market is very excited about this comment. USD/JPY quickly down to 119.70 as stops blown out in a drop from 120.40. USDJPY after the comments. The comments are from Koichi Hamada, adviser to Japanese Prime Minister Abe, speaking on BS Fuji TV. • Yen at 105./USD appropriate given purchasing parity • Yen at 120 is weak considering purchasing parity • Consumption will rise in Japan as stocks rise • Monetary policy is working well in Japan The market dropped as the comments were carried on Bloomberg.

WTF lolol
and what's that mean?
Right! :-)
What is it?
Meaning?
  •  Guest
  • | IP XXX.XXX.114.61
i'm confused with that
injecting short term yen strength via abrupt talks.. hahaaa, missed that one
Price displayed a Knee-jerk reaction?
Hamada's been trying to talk up the yen for months now. Never worked.
made 1 pip Great job
Let's see...possible pound sterling downturn, Abe says optimal usd/jpy is 105.....I'm going to see if I can short the gbp/jpy.
  •  Guest
  • | IP XX.XXX.191.226
It seems that the dollar is still strong
  •  Guest
  • | IP XXX.XX.215.228
JPY: Abe advisor Hamada out in interview on TV, says yen is weak with USDJPY at 120 considering purchasing power parity, suggests 105 is more appropriate. A bit of a reaction in USDJPY there to this "news" as market tries to figure out whether Japan is sending a political signal on the JPY after the somewhat critical US Treasury Report on Japan's monetary policy last week.
Why would he be talking the yen down (bad for exports)? It implies that monetary policy has caused the $/Yen to overshoot (bad policy), while at the same time he says monetary policy is working well.

He says consumption will rise along with stocks, but his comments cast doubt on continuation of recent monetary policy, so stocks are falling.

What was he really hoping to accomplish here? I'm confused.
"Why would he be talking the yen down"

Seems to me he's talking UP the Yen.
Quoting dchristi
Why would he be talking the yen down
He isn't, he's trying to bring it up.
who care abe )) this is only stop hunt action. all yen cross up, coming soon
  •  Guest
  • | IP XXX.XXX.25.178
Was that a green light for usd/yen to target 105 ?

GBP/JPY broke the 175.50 low, twice looks like 168 is on the cards now
jpy should go down to 125 at least, so now probably it has to go up a bit, and then we will se strong momentum up on usdjpy.
Quoting Ratmach
"Why would he be talking the yen down"

Seems to me he's talking UP the Yen.
You are absolutely right -- I meant to ask: why is he taking the $/Yen rate down?

A higher yen (lower $/Yen rate) is bad for exports, which are critical to the Japanese economy. It also weakens inflationary pressures, while a main policy goal of the Abe government is to increase inflation.
Muahhahahahahahahahha POWER!!!
He's just a dumb politician talking rubbish for a political audience. The Yen is being debased so must go down, the Jap Govt is bankrupt and a rising stockmarket due to QE doesnt necessarily lead to higher domestic spending. So buy the false dips.
Adios - King Dollar
Quoting bobn
He's just a dumb politician talking rubbish for a political audience. The Yen is being debased so must go down, the Jap Govt is bankrupt and a rising stockmarket due to QE doesnt necessarily lead to higher domestic spending. So buy the false dips.
I agree with this. Talk is cheap, and I don't see the Japanese government changing their policies anytime soon. **So far**, it looks like the market isn't buying all of this either.
the dollar looks like it might have reached a peak high
  •  Guest
  • | IP XX.XXX.231.114
Quoting dchristi
You are absolutely right -- I meant to ask: why is he taking the $/Yen rate down?

A higher yen (lower $/Yen rate) is bad for exports, which are critical to the Japanese economy. It also weakens inflationary pressures, while a main policy goal of the Abe government is to increase inflation.
Nowadays economy is not so simple at all.

When your currency is stronger, it means cheaper imports and remember Japan is an island with very little ressources.
They import a lot (energy, food...) and japanese companies also have a lot of oversea costs because not much is still build in Japan.
Also japan is a very old country, so for these old people a weaker currency is very bad.

Weakening JPY too fast could be Japan commiting suicide...it is a very dangerous move so maybe why he wants to halt it and observe how it turns out. If he wants to weaken it more he is not in a hurry anymore because they finally got able to weaken it after trying for year (if not a decade?)
  •  Guest
  • | IP XX.XXX.231.114
Still don't forget markets are not rationnal, it took me years to understand it is stupid to try to understand everymove on the market.

Some moves makes no sense because people don't need a fundamental or a rationnal reason to buy or to sell !
Quoting Guest
Some moves makes no sense because people don't need a fundamental or a rationnal reason to buy or to sell !
When you write this, you have to consider the position of Market Makers or Smart Money I would call them. They are NEVER in agreement with retail traders or Dumb Money ('hate that but that's the way it is) and remember what J.M. Keynes said: " The market can remain longer irrational you can remain solvent"! Says it all. So, stop trying to make sense out of nonsense .... Lol, Trade-Mark that for me
  •  Guest
  • | IP X.XX.130.64
It means FED needs to hold rates for more time!!
Quoting Guest
Nowadays economy is not so simple at all.

When your currency is stronger, it means cheaper imports and remember Japan is an island with very little ressources.
They import a lot (energy, food...) and japanese companies also have a lot of oversea costs because not much is still build in Japan.
Also japan is a very old country, so for these old people a weaker currency is very bad.

Weakening JPY too fast could be Japan commiting suicide...it is a very dangerous move so maybe why he wants to halt it and observe how it turns out. If he wants...
Great points. You could also argue that, with a strengthening currency, if you can hold your prices steady in overseas markets, your domestic profitability will rise.

But, as you say, it's complicated. Higher prices in Japan for foreign goods promotes domestic replacements. So there can be a trade balance improvement. One of the components of GDP is Exports minus Imports, so (on paper at least) GDP rises as the trade balance improves.

It's not cut-and-dried. But overall, I believe that a country's overall trade competitiveness improves as their currency falls (and vice-versa, one of the problems for the U.S.).
I'm awfully cynical when it comes to the Yen.

Why do some call the Yen trades "the widowmaker"? In my opinion the Yen is too susceptible to manipulation by the members of "Japan, Inc."

Would anyone care to bet whether he had bought a few trades shorting USD/Yen for himself? And told his buddies in banking, manufacturing, and government ahead of time so they could dip their beak too for a quick short term profit.
The key is in the first sentence: BS Fuji TV.
BS???
  •  Guest
  • | IP XXX.XXX.42.93
This means the Abe government "wants to have the cake and eat it too!". They want the 2% inflation and not pissing off the Japanese people! Good luck!
another old f prick which is serving friendly hedge fund... he f stopped nice up movement on USD/JPY... the economy would be much better without such an old puppet like him... and traders shouldn`t take so seriously such a talks... japan is in a deep a-hole for a loooooooongggg lonnggg time...
*Phone under table, takes short position*

"As I was saying, I believe the Yen is way over valued at the moment."

"Hold on- I have a call"

*Checks phone, closes position*

"I'm sorry, what was that? No I didnt say it was over valued. What are you talking about?"

*Goes to dealership, buys new car*
Wow why would Abe do that
Although I am not sure, I think maybe because it had the great number of tourists visiting Japan in the Easter holiday period (people need a huge amount of JPY).
And also face this USA company profit data week (he supposes USD will rise this week so need to do somethings to balance).
There is a chance, (like last October) they would like to push price down before announcing more QE. Their is a big world meeting on the 17th. Maybe getting the ok. Of course who really knows, but this was deliberate for sure and given that it undermines the whole QE motion, it makes me wonder.
  •  Guest
  • | IP XX.XXX.192.4
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  • Story Stats
  • Posted: Apr 13, 2015 8:42am
  • Submitted by:
     Newsstand
    Category: High Impact Breaking News
    Comments: 38  /  Views: 10,921