Japan’s Cabinet Speaks
Finance Minister Aso – appointed only yesterday – wasted no time in applying further pressure on the Bank of Japan. He said the “The BoJ has been insensitive to the problem of deflation”, according to the Nikkei newspaper. He urged both the BoJ and the MoF to change this attitude. Citing problems associated with a deflationary environment, he said that Japanese corporates are suffering due to the rising real value of their debt burdens. Chief Cabinet Secretary Suga then declared that the current price action in USDJPY is merely a reversal of past one-sided yen increases. The clear implication is that he feels the recent bout of yen weakness is justified and is therefore here to stay. Economy Minister Amari confirmed he plans to compile an economic stimulus plan in early January and that he will work to meet high market expectations. Meanwhile USDJPY continued to march higher overnight, finally climbing back above levels last seen when Japan intervened on Sept 15, 2010. USDJPY traded 85.48-85.87.
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