"While many have assessed Japan's powerful intervention (JPY 2 trillion worth of currency selling) via the lens of the US dollar, the operation could be a loud warning shot to Beijing, given the record buying of Japanese Government Bonds by China. Cynics (possibly realists) could reason that China seeks to hamper Japan's recovery by keeping the yen excessively strong, while profiting along the way (via accumulating appreciating yen and gradually reducing exposure to depreciating US dollars). After all, the race for the 2nd biggest economy remains in close contention between China and Japan.
Japan's finance minister Noda has already stated "I don't know the true intention", referring to China's JPY 583 bln purchases of JGBs in July after JPY 457 bln of purchases in June. Why would the Japanese Finance Minister make such a suspicious remark? The post-intervention statements from Tokyo regarding its resolve to pursue further action sound like a warning shot to Beijing's yen-purchases as opposed to the average currency speculator..."
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