The US government has made a "major change" in its foreign-exchange policy that will keep the greenback in a range of between ¥100 and ¥110, said Eisuke Sakakibara, Japan’s former top currency policy official.
“It was a major change in US foreign-exchange policy,” Sakakibara said in an interview with Bloomberg Television yesterday in Tokyo. “There has been a shift of their position because of inflation. They are now talking about intervention.”
US Treasury Secretary Henry Paulson said this month he would “never take intervention off the table” and Federal Reserve Governor Ben Bernanke said he was “attentive” to the dollar’s slump.
Group of Eight officials said at a summit over the weekend that a stronger US currency would help curb oil prices and inflation.
Sakakibara, who correctly forecast in an interview in October that the dollar would plunge, said in March that a US recession could push the yen as high as ¥80 or ¥90 in the next two years.
A professor at Waseda University in Tokyo, Sakakibara was dubbed “Mr Yen” due to his ability to influence the foreign-exchange market during his 1997-1999 tenure at the finance ministry.
Sakakibara said there was a “very small” chance that Japan would agree to joint intervention to limit the euro’s gains against the yen. He said it was unlikely policymakers would buy dollars with yen.
The yen fell to ¥108.40, the lowest level since Feb. 14, before trading at ¥108.24 at 11:25am in Tokyo from ¥108.19 late in New York on Friday. Japan’s currency declined to ¥166.74 against the euro from ¥166.35. The dollar traded at US$1.5405 per euro from US$1.5380. It earlier fell to US$1.5450 per euro.
“A strong dollar is in our nation’s interest,” Paulson told reporters after the G-8 meeting. French Finance Minister Christine Lagarde said she was “happy to hear Paulson clearly say how much the strong dollar policy is indispensable.” Canadian Finance Minister Jim Flaherty and Russian Finance Minister Alexei Kudrin said a stronger dollar would reduce oil prices.
The world economy faces “headwinds” from rising fuel and food costs, G-8 ministers said in Osaka, Japan, in a statement on Saturday that didn’t mention foreign exchange.
“The world economy continues to face uncertainty and downside risks persist,” G-8 officials said in a statement. “Elevated commodity prices, especially of oil and food, pose a serious challenge.”
The G-8, which includes the US, Japan, Russia, Germany, France, the UK, Italy and Canada, stuck to its practice of not making a joint comment on currencies when central bankers are absent.
The price of oil reached an unprecedented US$139.12 a barrel last week and food costs from rice to soybeans have risen to record highs this year.
The dollar has fallen against 11 of the 16 most active currencies this year as oil rose to a record. The US currency’s correlation with oil prices against the euro was minus 0.93 for the past year, according to Bloomberg calculations based on value changes. This means the two move in the opposite direction 93 percent of the time.
Sakakibara is on the Asia-Pacific advisory board of Bloomberg LP, parent of Bloomberg News.
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
Six years ago, LVMH’s billionaire CEO Bernard Arnault and US President Donald Trump cut the blue ribbon on a factory in rural Texas that would make designer handbags for Louis Vuitton, one of the world’s best-known luxury brands. However, since the high-profile opening, the factory has faced a host of problems limiting production, 11 former Louis Vuitton employees said. The site has consistently ranked among the worst-performing for Louis Vuitton globally, “significantly” underperforming other facilities, said three former Louis Vuitton workers and a senior industry source, who cited internal rankings shared with staff. The plant’s problems — which have not
RSS