Japan's finance minister said yesterday that authorities are closely monitoring the yen's rise against the US dollar but offered no clear sign of currency-market intervention to weaken the yen.
Meanwhile, a board member of the Bank of Japan said the central bank must carefully watch how problems in the US housing market might affect Japan's economy, suggesting that he doesn't see an imminent need to raise interest rates.
Worries about weakness in the US economy -- Japan's biggest export market -- and recent volatility in global financial markets have driven the US dollar to a two-and-a-half-year low, touching ?108.25 overnight. A strong yen hurts Japan's exporters by eroding their foreign-earned income.
Asked about the dollar's drop, Finance Minister Fukushiro Nukaga told Dow Jones Newswires that "we will closely watch that issue."
Nukaga expressed caution about the outlook for Japan's economy, repeated that the government must closely monitor how the so-called subprime mortgage crisis affects consumer spending in the US.
Separately, Bank of Japan (BOJ) board member Seiji Nakamura said that Japan's economy may suffer if problems in the US housing and banking sectors become more severe or fluctuations in financial markets increase.
"The global economy may deteriorate if the US economy sharply worsens," he said. "There is also the possibility that the Japanese economy may be negatively influenced."
The BOJ last raised interest rates to 0.5 percent in February. Many market players now believe the BOJ won't raise rates before the fiscal year ends in March.
Nakamura stressed that leaving monetary policy too easy for too long carries its own risks.
"Real interest rates remain at very low levels. If the expectation takes hold that interest rates will remain low for a long time, it will produce distortion in price formation in the market and allocation of resources. We have to cautiously watch the risk," he said.
But he offered few hints to the timing of the next rate hike.
Meanwhile, the head of China's central bank says Beijing wants a strong US dollar, a government news agency said yesterday.
Zhou Xiaochuan (周小川), governor of the People's Bank of China, made the comment to US Treasury Secretary Henry Paulson at a conference in South Africa, the Xinhua news agency said.
"Zhou said he told Paulson China hopes to see a strong dollar," Xinhua reported.
It said Zhou was responding to Paulson's prediction of a long-term recovery of the weakening dollar, which fell to another record low against the euro yesterday.
Zhou's comments put "weight behind the slumping currency," Xinhua said.
The US dollar has been falling against the euro, yen and other major currencies amid fears for the health of the US economy, stoked by the subprime mortgage crisis. Concerns about the US' huge trade deficit, which leaves more dollars in the hands of foreigners, is also weighing on the currency.
China keeps a large share of its US$1.43 trillion in reserves in US dollar-denominated assets such as US Treasuries, which means a falling dollar erodes the value of its holdings. Financial markets are watching to see whether Beijing shifts to a stronger currency such as the euro.
Zhou said that only when the dollar "devalues drastically can it be called weak, the scenario of which is likely to bring uncertainty to the world economy, to the reluctance of all parties concerned," Xinhua reported.
Zhou and Paulson were attending a meeting of the G20 -- the world's 20 biggest economies.
A Chinese freighter that allegedly snapped an undersea cable linking Taiwan proper to Penghu County is suspected of being owned by a Chinese state-run company and had docked at the ports of Kaohsiung and Keelung for three months using different names. On Tuesday last week, the Togo-flagged freighter Hong Tai 58 (宏泰58號) and its Chinese crew were detained after the Taipei-Penghu No. 3 submarine cable was severed. When the Coast Guard Administration (CGA) first attempted to detain the ship on grounds of possible sabotage, its crew said the ship’s name was Hong Tai 168, although the Automatic Identification System (AIS)
An Akizuki-class destroyer last month made the first-ever solo transit of a Japan Maritime Self-Defense Force ship through the Taiwan Strait, Japanese government officials with knowledge of the matter said yesterday. The JS Akizuki carried out a north-to-south transit through the Taiwan Strait on Feb. 5 as it sailed to the South China Sea to participate in a joint exercise with US, Australian and Philippine forces that day. The Japanese destroyer JS Sazanami in September last year made the Japan Maritime Self-Defense Force’s first-ever transit through the Taiwan Strait, but it was joined by vessels from New Zealand and Australia,
CHANGE OF MIND: The Chinese crew at first showed a willingness to cooperate, but later regretted that when the ship arrived at the port and refused to enter Togolese Republic-registered Chinese freighter Hong Tai (宏泰號) and its crew have been detained on suspicion of deliberately damaging a submarine cable connecting Taiwan proper and Penghu County, the Coast Guard Administration said in a statement yesterday. The case would be subject to a “national security-level investigation” by the Tainan District Prosecutors’ Office, it added. The administration said that it had been monitoring the ship since 7:10pm on Saturday when it appeared to be loitering in waters about 6 nautical miles (11km) northwest of Tainan’s Chiang Chun Fishing Port, adding that the ship’s location was about 0.5 nautical miles north of the No.
SECURITY: The purpose for giving Hong Kong and Macau residents more lenient paths to permanent residency no longer applies due to China’s policies, a source said The government is considering removing an optional path to citizenship for residents from Hong Kong and Macau, and lengthening the terms for permanent residence eligibility, a source said yesterday. In a bid to prevent the Chinese Communist Party (CCP) from infiltrating Taiwan through immigration from Hong Kong and Macau, the government could amend immigration laws for residents of the territories who currently receive preferential treatment, an official familiar with the matter speaking on condition of anonymity said. The move was part of “national security-related legislative reform,” they added. Under the amendments, arrivals from the Chinese territories would have to reside in Taiwan for
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