‘Abenomics’ Is Going to Fail: Mr. Yen


 

Bloomberg | Getty Images

“Abenomics” will not be able to achieve the two percent inflation target in Japan, Eisuke Sakakibara, former vice finance minister of Japan told CNBC on Friday, referring to Prime Minister Shinzo Abe’s combination of ultra-loose monetary policy and fiscal stimulus.

“In terms of two percent inflation, it [‘Abenomics’] will fail. Deflation is structural. Even at the time, when Japan was in the upward [growth] swing between 2002 and 2007, prices went down. It will be extremely difficult to get out of deflation,” said Sakakibara, also known as “Mr. Yen” for his efforts to influence the currency’s exchange rate through verbal and official intervention in the forex markets in the late 1990s.

Following significant pressure from Abe for bolder action, the Bank of Japan in January doubled its inflation target to 2 percent and made an open-ended commitment to buy assets from 2014. The central bank’s new governor Haruhiko Kuroda, who won parliament’s approval on Friday, has vowed to do “whatever it takes” to achieve the inflation goal in two years.

(Read More: Japan Parliament Approves Kuroda as BOJ Governor)

But according to Sakakibara structural deflation in the world’s third largest economy is largely a result of the integration between the Japanese and Chinese economies and hence near impossible to move away from.

“Cheap Chinese goods come into Japan and push down the prices. And a lot of Japanese companies go to China to manufacture goods — so it’s not going to change,” said Sakakibara, who is currently a professor at Aoyama-Gakuin University in Tokyo.

Sakakibara, however, is more positive on the prospects for Abe’s policies to lift growth in the economy.

“We may able to get something like a 2 to 2.5 percent growth rate in real GDP [gross domestic product], this would be the year of recovery,” he added. The economy expanded 0.2 percent in the final three months of 2012, after contracting for two consecutive quarters from April through September.

Yen Warning

Sakakibara sounded a word of caution on continued depreciation in the yen — which has weakened almost 11 percent against the U.S. dollar since the start of the year.

He noted that if dollar-yen breaks 100, the next stop for the currency pair could be 130, adding that this would be “risky” for the Japanese economy.

“I remember in 1998, 1999 — it [dollar-yen] did go to 150 — I was at that time in the government, I was terrified,” he said.

(Read More: Is the Yen Going Into a Free-Fall?)

Weakness in the yen is a doubled edged sword for the economy, while it boosts the competitiveness of Japanese exporters, it also increases the cost of the country’s fuel imports. Japan’s dependence on fuel imports has increased after the Fukushima nuclear disaster in March 2011, which led to the closure of most of the country’s reactors.

According to Sakakibara, dollar-yen between 90 and 95 would be most favorable for the economy. Dollar-yen was trading around 96 on Friday.

‘Abenomics’ Is Going to Fail: Mr. Yen

March 2, 2013


The contest “01 – Y2013 Contest (MG-PT)” completed over four weeks.
This month my performance has improved slightly.
Since the account I am using is a “managed fxTrade Practice accounts”, that bas been discontinued, is now deprecated and for this reason, I can not add or remove funds from Them. The goal that was initially designed: “For 2013, the main goal is to work only with capital generated (Realized P&L) by business “, will be slightly adapted and will no longer use this account.
I’ll open a new account with a balance equal to the Realized P&L (≈1 Billion) of this deprecated account and continue only with the money made ​​in the business.

See details below.
——————————————–

Portfolio Return (MG-PT account):

PRSep2008To20130302

MG-PT

20130302MG-PT

 P&L

RealSep2008to20130302

01 – Y2013 Contest (MG-PT)

Statistics reflect account status as of March-02-2013 00:00

20130302Contest01-Y2013

Bank of England | Publications | News Releases | News Release – G7 Statement


 

“We, the G7 Ministers and Governors, reaffirm our longstanding commitment to market determined exchange rates and to consult closely in regard to actions in foreign exchange markets. We reaffirm that our fiscal and monetary policies have been and will remain oriented towards meeting our respective domestic objectives using domestic instruments, and that we will not target exchange rates. We are agreed that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will continue to consult closely on exchange markets and cooperate as appropriate.”

Bank of England | Publications | News Releases | News Release – G7 Statement

February 2, 2013


The contest “01 – Y2013 Contest (MG-PT)” completed this weekend the first 5 weeks.
The first five weeks were equilibrated with a CPL slightly negative.

See details below.
——————————————–

Portfolio Return (MG-PT account):

PRSep2008To20130202

MG-PT

130202MG-PT

 P&L

RealSep2008to20130202

01 – Y2013 Contest (MG-PT)

Statistics reflect account status as of February-03-2013 00:00

130203Contest01-Y2013

Week in FX Americas – Loonies Flight Is Not As Clear As the EUR’s | OANDA Forex Blog


 

  • Demand for Treasuries back after NFP Friday
  • US Weekly Claims Move Higher
  • No more ‘Ninja Loans’ as Fed tightened rules
  • ‘Loonie’ A Non Mover After Housing Starts
  • US Tsy’s Little Changed Ahead of +$21B Debt Sale
  • US Oil Output increases, WTI/Brent Spread to decrease
  • Bond Yields to go up in 2013
  • ‘Fear Index’ Vix may bounce back after biggest 1-week drop
  • EUR/USD – Euro Moves Higher, Testing 1.31
  • Week in FX Americas – Loonies Flight Is Not As Clear As the EUR’s | OANDA Forex Blog

    Week in FX Asia -Yen Fall a Life Saver For Exporters, But What About Debt Holders? | OANDA Forex Blog


     

    Week in FX Asia -Yen Fall a Life Saver For Exporters, But What About Debt Holders? | OANDA Forex Blog

    December 30, 2012


    2012 was a year of getting things stable. The main concern was to have all positions below 2 billion without major damage.
    For 2013, the main goal is to work only with capital generated (Realized P&L) by business.

    See details below.
    ——————————————–

    Portfolio Return (MG-PT account):

    PRSep2008To20121230

    MG-PT
    121230MG-PT
    P&L
    RealSep2008to20121230