By Timur Abimanyu, SH.

MH

September 14, 2010

Japan’s a mess – so why is the yen so strong?
Posted: 651 GMT

Japan’s yen has hit 15-year record highs in recent weeks.

A towering national debt, a revolving door of prime ministers and an export-driven

economy limping slowly from its worst economic slump since World War II – Japan’s got it
bad.
So why is the yen trading at 15-year record highs?
A number of factors have combined to pump the yen up to 83.36 per dollar on Tuesday, the
highest since May 1995.
investors brought back to Japan as the global economy crashed, and the yen continued to
strengthen.
Another factor: Countries and investors diversifying away from the dollar in the
wake of the crisis were looking for a safe investment, and the yen was a popular choice.
Most notably, Beijing has been snatching up a record number of Japanese government bonds
instead of U.S. ones.
“That to me explains largely what is happening to the yen in the face of what is reasonably
dark economic news and a difficult political situation,” said Benjamin Pedley, head of
investment strategy in North Asia for HSBC Private Bank.
And that adds to the difficulties for Japan’s recovery – a strong yen cuts the profits of its
products abroad.
The markets are waiting to see if the saber rattling among Japanese politicians on the
skyrocketing yen will turn into a government intervention to lower the value of the currency.
The government hasn’t taken such steps since 2004.
But Pedley doubts any intervention by the government will have any long-term
effect on the strength of the yen. Trading partners in Europe and North America, on balance,
would prefer a stronger yen. “The problem is, any intervention would be unilateral – they
won’t have any cooperation,” Pedley said.
With the re-election of Naoto Kan as head of his party - and as Japanese prime minister - the
markets are betting that the yen will remain high. The Tokyo markets closed before the vote,
but hit a fresh 15-year high on the belief that Kan would survive the internal challenge from
Ichiro Ozawa, who favored a strong intervention in the markets.

Based on the results of data collected from respondents / readers who analyze and
assumptions :
I hope my country South Africa will learn from Japan and will consider our call for
nationalising our countries resources instead of concentrating on enriching themselves and
closed ones while living the poor sleeping on empty stomach.

2
Answer is easy – take advantage of all of the faith that foreigners have in the currency and
print money to dilute at the holder's expense. Pay off the debts with printed money.
It's a very classic scam, which tends to drive up inflation as people lose faith the the
currency, but as long as people have faith ... and they are foreign holder .... print print print...
As the US is doing right now to China to some extent.

September 16th, 2010 6:44 am ET

The Japanese yen's rapid 15 year highs results in decreased international demand for
Japanese goods creating further growth issues for the Japanese manufacturing industries.
In May 2009, Moody's Investor Service downgraded Japan's sovereign debt by two notches
from Aaa (Triple-A) to Aa2. Again in February 2010, Moody's threatened to change its
outlook on Japan to negative unless the country got its debt under control. In its May
downgrade, Moody's cited challenges that face the Japanese economy because of their
increase in debt issuance to fund a massive $159 billion stimulus spending program to
combat the recession of 2008 – 2009. Japan issued huge amounts of debt during the last 2
decades to combat deflationary pressures in their economy.
Currency/Yen issue would continue unless above issues resolved.

September 16th, 2010 12:28 pm ET

Japan and Europe have (to) high currencies cause thei governments are beating inflation.
USA and China are focusing on employability, i.e. export, and are pushing their currencies
low.Thats why in the short run Japanese and European people think they are doing well, but
all they do is putting their children in unemployment, that is Trichet does. America people
are now for a while complaing about their worthless dollar, especially the elder epople who
have workes a lifetime and they have seen their money going to air.
In medium and longer run China and USA will do well I gues. And Europe and Japan are
becoming to expensive and their export and employment will go down through the toilet.
The global leaders and leaders of the central banks better let currencies let return to their true
values and realize that they hurt main street everyday they do not intervene.
September 16th, 2010 12:28 pm ET

3
Japan and Europe have (to) high currencies cause thei governments are beating inflation.
USA and China are focusing on employability, i.e. export, and are pushing their currencies
low. Thats why in the short run Japanese and European people think they are doing well, but
all they do is putting their children in unemployment, that is Trichet does. America people
are now for a while complaing about their worthless dollar, especially the elder epople who
have workes a lifetime and they have seen their money going to air.In medium and longer
run China and USA will do well I gues. And Europe and Japan are becoming to expensive
and their export and employment will go down through the toilet. The global leaders and
leaders of the central banks better let currencies let return to their true values and realize that
they hurt main street everyday they do not intervene.
Posted by: CNN.com business producer, Kevin Voigt
Filed under: Business •Investment •Japan

Sumber Data :
The White House Blog
http://www.CNN.com
http://www.bussiness.com
http://www.Antara.com
http://www.yahoonews.com
http://www.Liputan6.com