Japan, Ending `Lost Decade,' May Abandon Market to Let Yen Rise

[Proetus]

http://www.bloomberg.com...

April 1 (Bloomberg) -- A year after Japan's government made its last effort to sway exchange rates, traders are betting the country that sold $43 billion of yen in March 2004 will stand aside should the yen again start climbing.

As the world's No. 2 economy emerges from a 14-year slump, Japan will probably scrap a 10-year policy of keeping the yen weaker than 100 per dollar, says Bankim Chadha, head of macro currency research at Deutsche Bank AG in New York. The yen reached a five-year high of 101.68 in January.
...
``I'm optimistic on the outlook in terms of the economy,'' says Chadha, a 17-year veteran of the International Monetary Fund. He says he expects faster Japanese growth to help the yen appreciate to 97 by the end of June, the highest value against the dollar since 1995, and predicts the government won't sell the currency unless it reaches 95. ``The lost decade is over.''
...
Japan hasn't sold its currency since March 16, 2004, Ministry of Finance statistics show. The ministry said yesterday that Japan refrained from selling yen for a 12th month in March. That makes the fiscal year that ended yesterday the first in eight without government currency sales.

The year before that, Japan's government sold $309 billion of yen in today's dollars to slow a rally that threatened export growth -- more than any government has ever sold in a 12-month period. Japan's foreign-currency reserves, which grow when the government sells yen for dollars, are the world's largest at $820.5 billion as of Feb. 28.

Eisuke Sakakibara, 64, Japan's former currency policy chief, predicts the yen will advance to 95 to the dollar this year. Japan shouldn't try to halt the advance, he says.
...
Japanese exporters including Toyota Motor Corp. and Sony Corp. also forecast the yen will fall later this year. Toyota, Asia's biggest carmaker, predicts a yen-dollar exchange rate of 106 for the fourth quarter. Sony, the world's No. 2 consumer- electronics maker, expects a 105 rate for the October-December period.

Merrill Lynch & Co. -- the most accurate currency forecaster in the year through September, according to data compiled by Bloomberg -- expects Japan to try to slow yen gains, predicting greater-than-90 percent odds that the government will sell yen for dollars in July and August.

The world's largest securities firm projects that, even with the sales, Japan will let the currency rise to 89 by September.

[tgagneguam]

This will have minimal effect on the competitive pressure GM experiences from Toyota, much to GM's [and GMI faithfuls'] chagrin, I imagine.

[ibechip]

Originally Posted by tgagneguam

This will have minimal effect on the competitive pressure GM experiences from Toyota, much to GM's [and GMI faithfuls'] chagrin, I imagine.

Every little bit helps.

[Erunion]

89 yen to the dollar would produce minimal effect? Ha!

[Maverick]

We still need to work on a lot of other countries.

[RWD60]

given that like 60-80 percent of the cars Toyota, Nissan and i think Honda as well, sell here are assembled here... yeah, this currency change will have minimal effect. it'll affect the profits heading back to japan, by much of the income they make here is invested in plants and advertising and such for our market, the overall effect would be minimal. now, if it fell to like 50 yen to the dollar, that would help some, more so with our exports to them than imports...

[mbukukanyau]

Gm will recover not becouse of Currency but better products, And March Shows, the New Malibu, Cobalt, G6, 400 HP GTO, Yes those silly Vans, with better interious, and best Fuel economy in class will do well...
There are more news cars and New trucks on the way... GM is really on the roll...

Product, Products, products is Key...

[Cortazzo]

The japanese manufacturers are only really hurt if the yen rises unexpectedly, then they wouldn't have hedged against its rise. But even with US assembled japanese vehicles, many of their major components are sourced from japan, and their costs will rise. This could go a long way towards evening out the competition a little bit, hopefully keeping US supplier and manufacturing jobs here.

[Pro GM and Ford]

"This could go a long way towards evening out the competition a little bit, hopefully keeping US supplier and manufacturing jobs here."

Amen. I would also like to see the US government do whatever *IT* can do to preserve these types of jobs. Somehow capitalize on Japan's currency moves, if possible.

[jro4566]

Originally Posted by mbukukanyau

Yes those silly Vans, with better interious, and best Fuel economy in class will do well...

Yup, Odyssey and Sienna sales are pretty high.

[surferdude00711]

Originally Posted by RCtennis3811

Yup, Odyssey and Sienna sales are pretty high.

Lol I'm guilty of helping to push the latter of the two up . But it is such a COMFORTABLE car.

[tgagneguam]

Originally Posted by RWD60

given that like 60-80 percent of the cars Toyota, Nissan and i think Honda as well, sell here are assembled here... yeah, this currency change will have minimal effect....

Thanks, that was the point I was making.

And if people are relying on the yen changing drastically to help GM's competitive situation, then GM's situation is more tenuous than I originally thought.

Yen fluctuations, please. It would do little to stop Toyota [in the long run].

[AndrewGS]

It's too bad we can't use our current dollar value to gain with exports.

[griswold44]

Originally Posted by RCtennis3811

Yup, Odyssey and Sienna sales are pretty high.

AMEN

[a_v_s]

Why do you want the competing vehicles to be more expensive, to make it an even playing field? How is that good for the consumer? To level the playing field, GM should just build better/desirable cars. Not ask the government to force their competition to be more expensive.

I fail to understand, (for example), why GM says it will not be profitable to import the Caddy BTS from Europe. Lexus, Infiniti, BMW, etc, import cars from overseas and are profitable at doing it....