政府・日銀協調 「次の一手」も視野に入れよ

The Yomiuri Shimbun (Sep. 1, 2010)
BOJ should consider next step to curb high yen
政府・日銀協調 「次の一手」も視野に入れよ(8月31日付・読売社説)

The government and the Bank of Japan have finally begun working in a coordinated manner to stop the sharp appreciation of the yen.

The central bank decided at an extraordinary Policy Board meeting Monday to take new steps for further quantitative monetary easing. It will increase lending to the market by 10 trillion yen, to a total of 30 trillion yen, at an extremely low interest rate of 0.1 percent a year.

Also Monday, Bank of Japan Gov. Masaaki Shirakawa met Prime Minister Naoto Kan in person to discuss the current state of the economy. Later in the day, the government decided on an outline of additional measures to create jobs and stimulate consumption. Kan stressed that the government will flexibly implement both economic and financial measures to deal with the slowdown in the economy.

In the meantime, we would like to praise the government and the Bank of Japan for working on economic policy in a coordinated manner.


Nothing unexpected

However, the content of the further monetary easing and other measures they announced did not go further than what might have been expected, and left more to be desired. We also have to say the government and the Bank of Japan took action rather late. They should implement policy management with a stronger sense of urgency.

Even after the central bank announced further monetary easing in the early afternoon, the yen's appreciation continued. The Nikkei Stock Average recovered to the 9,000 mark in the morning, on expectations for new financial steps, but trimmed earlier gains in afternoon trading.

Many market players apparently doubt the central bank's commitment to further monetary easing. Certainly, there is a strong impression that the central bank has unwillingly implemented measures piecemeal under pressure from the government and the market.

The central bank's measures also lost some of their impact because U.S. Federal Reserve Board Chairman Ben Bernanke took the preemptive action last week of announcing that the U.S. central bank was ready for further monetary easing steps.

The market is now becoming more and more interested in what steps the Bank of Japan will take next. The central bank should consider the outright purchase of more long-term government bonds and other new monetary easing steps so that speculators will never again capitalize on its delay in taking action and the yen's appreciation will not accelerate as a result.

The strong yen eats into the profits of exporters and their subcontractors, such as parts manufacturers, dampening their enthusiasm for capital spending.

About 40 percent of manufacturing companies reportedly said they will move factories, and research and development centers from Japan to other countries if the yen stays at its current level of 85 yen to the dollar. We must not allow domestic industry to be hollowed out, thereby weakening the Japanese economy.

The government and the Bank of Japan must demonstrate their firm resolve not to allow the current level of the yen's appreciation by considering the option of yen-selling intervention in the exchange market.


Watch political moves

The government also must pay attention to the influence of political developments on the market. Long-term interest rates last week temporarily rose sharply, caused by the market's concern that handout measures might increase in the near future, depending on the outcome of the Democratic Party of Japan's presidential election in September.

The market is greatly influenced by a variety of factors. We expect the DPJ, as the major party in the ruling coalition, to listen carefully to voices of the market.

(From The Yomiuri Shimbun, Aug. 31, 2010)
(2010年8月31日01時27分 読売新聞)

by kiyoshimat | 2010-09-01 08:46 | 英字新聞

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