NationStates Jolt Archive


Dollar drops below 100 yen.

Daistallia 2104
13-03-2008, 16:03
Dollar Falls Below 100 Yen

By YURI KAGEYAMA – 3 hours ago

TOKYO (AP) — The dollar dipped below 100 yen for the first time in 12 years Thursday and hit record lows against the euro amid a growing consensus that synchronized efforts by central banks will not stop a deterioration in the U.S. economy.

The euro exceeded $1.56 for the first time and the dollar fell as low as 99.75 yen before bouncing back to 100.16 yen. It was the first time the U.S. currency has traded below 100 yen since November 1995.

The dollar has been declining on growing speculation that the Federal Reserve will cut interest rates further to shore up the sagging American economy and calm jittery financial markets.

"The momentum is definitely downward for the dollar," said Daisaku Ueno, senior economist at Nomura Securities Co. "With the momentum going like this, no one knows where it will stop."

The U.S. currency's slide likely won't stop until worries subside about the U.S. credit crunch, set off by a spike in defaults on risky mortgages, said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo.

A strong yen makes the nation's exports more expensive abroad and erodes profits from overseas.

"That's not good for Japan's economic growth," said Yamamoto.

Anxious investors sent Japan's stock market to its lowest in 2 1/2 years, with the Nikkei 225 index tumbling 3.3 percent to 12,433.44.

So far this year, the dollar has fallen 10 percent against the yen. It was trading at 102.04 yen late Wednesday in New York.

The dollar has fallen so quickly in recent days that Japan's finance minister warned the markets against causing "excessive" moves in the dollar-yen rate — language that indicates an increasing concern about the rising yen damaging Japan's slowing economy.

"It's also a shared perception among the (Group of Seven leading industrialized nations) that excessive exchange rate moves are undesirable," Finance Minister Fukushiro Nukaga told reporters.

But his comments are largely being interpreted in the markets as an indication that Japan is not going to intervene in the markets to prop up the dollar.

Tokyo is also seen as unlikely to shift its reserves away from the U.S. Treasuries and dollar deposits that make up most of its reserves now.

Japanese company officials have expressed worries about the dollar's recent weakness.

Just hours before the dollar's decline below 100 yen, Toyota Motor Corp. President Katsuaki Watanabe acknowledged some worries about excessive currency fluctuations.

While declining to comment on the dollar's drop, he told reporters that Toyota may have to come up with new steps, not just cost cuts, as a possible response. He did not elaborate.

"We may have to think whether there are other things to do," he said.

The euro climbed steadily in early trading, reaching $1.5612.

The British pound hit a three-month high, reaching $2.0374.

http://ap.google.com/article/ALeqM5hiVtV2zuQIAFn_h-JnQjvVSfPTRgD8VCGMM01

So much for anything resembling a recovery for Japan's economy...
Khadgar
13-03-2008, 16:11
http://ap.google.com/article/ALeqM5hiVtV2zuQIAFn_h-JnQjvVSfPTRgD8VCGMM01

So much for anything resembling a recovery for Japan's economy...

Eh, too much of their economy tied up in ours?
Skaugra
13-03-2008, 16:28
A sad day indeed. Soon, the dollar won't even be equal to seventy five yen...
Wilgrove
13-03-2008, 18:54
Great, even the Peso will be worth more than the US Dollar in the near future. :(
Sanmartin
13-03-2008, 18:55
But a four-hour block with a prostitute is still worth 5000 dollars...
New Stalinberg
13-03-2008, 19:55
Quit your bitching, we're the most powerful and richest nation on the planet, and it's going to remain that way for quite some time.

Our economy is worse than it was before because the housing market was built on money we didn't have.

Go out and buy stock while it's cheap, and then sell it when it becomes worth money again.
Tmutarakhan
14-03-2008, 01:07
The dollar will have to give up about half its value before this stops.
Neu Leonstein
14-03-2008, 01:33
The dollar dipped below 100 yen for the first time in 12 years Thursday and hit record lows against the euro amid a growing consensus that synchronized efforts by central banks will not stop a deterioration in the U.S. economy.
That might be because that's not what it was meant to do.

a) Of course the dollar dropped in price. They just pumped 200 billion more of the things into the world market.

b) The policy is to allow banks to swap some mortgage-backed securities against the Fed's own treasury bonds for 28 days. During those 28 days the banks can then use the treasury bonds as collateral to secure loans to finally get the cash they can't get because no one accepts the mortgage-backed stuff as collateral anymore (and the banks are still hesitant to lend each other anyways).

So this policy was not designed to help the US economy, it was designed to try and break the gridlock in the credit market. And I think it was a pretty good idea.

Now, what people in the financial markets are saying isn't that the policy won't help the economy, but that it won't end the credit crunch because it can't do anything to affect the underlying problems of these mortgage-backed securities and it's simply a short-term fix designed to try and buy people a little bit of time.

The dollar will have to give up about half its value before this stops.
If it gets anywhere near that point, Japan and China will be very seriously considering selling parts of their reserves. And if they do, the fall might well be more than half its value, at least for a while.

IMF rescue package for the US Dollar? Hell, why not...;)
Call to power
14-03-2008, 01:49
at least the Chavs are going to die out (http://news.bbc.co.uk/1/hi/business/7294040.stm)

course how ever will my plan for a gold powered engine take off now!?
The Vuhifellian States
14-03-2008, 01:56
Meh, it's the economic cycle. By the time I get out of college, the economy's going to be booming again.
Tmutarakhan
14-03-2008, 01:59
If it gets anywhere near that point, Japan and China will be very seriously considering selling parts of their reserves. And if they do, the fall might well be more than half its value, at least for a while.
My assumption that the dollar will be cut in half is based on precisely that thought, that once the dollar has lost a large percentage of its value some hefty reserves sell-offs will occur. The estimate that it will level off when the dollar has lost "half" its value is a WAG.