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Friday, May 12, 2006

Japanese decision makers worried with strong Yen

(By Razib Ahmed)
Japanese Minister of Finance Sadakazu Tanigaki is now a very worried man as he can see that the price of his currency Yen is going up while the index of his share market Nikkei is going down. The price of Yen has increased substantially against US dollar in the last few weeks and in less than one month, the price of dollar has decreased by 8 yens. Today, the price of dollar fell below the 110 yen mark and it caused concern among Japanese decision makers. A strong Yen means that the price of Japanese products will become more expensive in the international market and Japanese exporters get badly affected. Japanese exporters are already enough worried about competing with China. The Chinese government has maintained a tight grip over the price of its currency and thus Chinese exporters are getting good support from their government.

Now, the main interesting thing for the observers to see is that whether the Japanese Government intervenes in the currency market or not to help the Japanese exporters. The government has more or less has refrained itself from intervening in the currency market for the last two years.

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