The Obama administration on Friday put Japan on notice that it was watching its economic policies to ensure they were not aimed at devaluing the yen to gain a competitive advantage.
In a semi-annual report on currency practices of major trade partners, the United States also said China's currency remained "significantly undervalued," but again stopped short of labeling the world's second-biggest economy a currency manipulator.
It has been more than 18 years since the U.S. Treasury has designated any country a manipulator. China was labeled a manipulator between 1992 and 1994.
The U.S. Treasury said it would press Japan to adhere to the commitment it made in February as a member of the Group of Seven and Group of 20 nations to let the market determine exchange rates. The U.S. move followed comments by Japanese officials that suggested they were targeting a weaker yen.
Treasury's report highlighted statements made by Japanese officials last year who said they wanted to "correct the excessively strong yen," and also some proposals to ease monetary policy by purchasing foreign bonds.
But since then, Japan has mostly avoided commenting on the yen and has not intervened in currency markets, according to the congressionally-mandated report.
The Treasury also said it was closely monitoring policies in Japan meant to support the growth of domestic demand. The Bank of Japan launched a massive bond-buying program earlier this month to try to shock the economy out of two decades of stagnation.
The policy has sharply undercut the value of the yen — sending the dollar to another four-year high against the Japanese currency on Thursday — and refueled a debate about competitive devaluations.
The U.S. Treasury also said China did not meet the legal requirements to be deemed a currency manipulator, although Beijing controls the pace at which the yuan can rise by intervening in foreign exchange markets.
The label is largely symbolic, but would require Washington to open discussions with Beijing on adjusting the yuan's value. Many U.S. lawmakers have accused China of deliberately keeping the yuan undervalued to gain a trade advantage.
As in other reports over the last several years, the analysis on China reflected both the administration's desire to maintain good relations with its top creditor and an attempt to keep up pressure for changes in China that could benefit the U.S. economy and mollify domestic critics.
Efforts to take a stronger stance on China's currency moves have also faded due to an increase in the value of the yuan, a big drop in China's global trade surplus and a rise in labor costs that has made Chinese products less competitive.
The report said China had allowed the yuan to rise 16.2 percent against the dollar in inflation-adjusted terms since June 2010, when China moved off its exchange rate peg.
The yuan, also known as the renminbi, hit a record high against the dollar on Friday as China's central bank fixed its official midpoint for the currency at the strongest level yet ahead of a Beijing visit by U.S. Secretary of State John Kerry.
The United States also said it remains concerned that China's progress may not last. For example, China's trade surplus has narrowed not only due to a higher yuan, but also because of weak demand for Chinese exports in advanced economies, suggesting the trend may reverse once the global economy recovers more.
The U.S. Business and Industry Council condemned the currency report, and called on the Obama administration to use tariffs to punish China for manipulating the yuan.
As in the previous report, Treasury also kept the pressure on South Korea, urging it to limit foreign exchange intervention except in exceptional circumstances.
South Korea says it intervenes to smooth the volatility of its won currency. But Treasury said it had gone into the market throughout 2012.
Fundamental and technical analysis on local, regional and global financial markets and investments.
Sunday, April 14, 2013
usd,aussie and yen
The dollar moved further away from last week's four-year high against the yen on Monday after the United States said it would watch Japan to ensure its policies were not aimed at weakening its currency.
Commodity currencies also took a kicking after data showed the pace of Chinese growth stumbled in the first three months of the year, undershooting expectations.
The Aussie dollar slipped 0.6 percent to $1.0439 as industrial output in China, Australia's biggest export market, also disappointed. That took it further from a three-month high of $1.0583 marked on Thursday.
The Kiwi dollar lost 1.2 percent to $0.8486, stopping short of support at $0.8480, the 38.2 percent Fibonacci retracement of its March to April rally, above another level of support at $0.8449.
With the yen firming across the board, the dollar pared its earlier gains against the Japanese currency, sagging 0.2 percent to 98.15 yen, well shy of a four-year peak of 99.95 yen struck on trading platform EBS on Thursday, but above Friday's low of 98.08 yen. With the yen firming across the board, the dollar pared its earlier gains against the Japanese currency, sagging 0.2 percent to 98.15 yen, well shy of a four-year peak of 99.95 yen struck on trading platform EBS on Thursday, but above Friday's low of 98.08 yen.
On Friday, the U.S. Treasury Department said in a semi-annual report on currency practices on major trading partners that it would press Japan to adhere to the commitment it made in February as a member of the Group of Seven and Group of 20 nations to let the market determine exchange rates.
However, many analysts are betting that the yen's slide will resume, in light of the Bank of Japan's radical monetary policy overhaul that will pump about $1.4 trillion into the economy in less than two years, although investors may be unwilling to move before a two-day G20 meeting beginning on Thursday.
On Friday, data showed that U.S. retail sales fell 0.4 percent in March, suggesting the economy may have faltered at the end of the first quarter.
Strategists and market participants say the pace of the dollar's upward progress against the yen will largely be determined by whether the BOJ's massive asset-buying prompts Japanese investors to increase their overseas investments, and the extent to which those investments will be unhedged.
Currency speculators decreased their bets in favor of the dollar in the latest week, according to data from the Commodity Futures Trading Commission released on Friday.
One potentially dollar-supportive factor is the escalation of tension on the Korean peninsula, and any negative developments on that front could prompt investors to buy back the U.S. currency.
North Korea has threatened for weeks to attack the United States, South Korea and Japan since the United Nations imposed new sanctions on the rogue state in response to its latest nuclear arms test in February, fueling speculation it might launch another missile.
Commodity currencies also took a kicking after data showed the pace of Chinese growth stumbled in the first three months of the year, undershooting expectations.
The Aussie dollar slipped 0.6 percent to $1.0439 as industrial output in China, Australia's biggest export market, also disappointed. That took it further from a three-month high of $1.0583 marked on Thursday.
The Kiwi dollar lost 1.2 percent to $0.8486, stopping short of support at $0.8480, the 38.2 percent Fibonacci retracement of its March to April rally, above another level of support at $0.8449.
With the yen firming across the board, the dollar pared its earlier gains against the Japanese currency, sagging 0.2 percent to 98.15 yen, well shy of a four-year peak of 99.95 yen struck on trading platform EBS on Thursday, but above Friday's low of 98.08 yen. With the yen firming across the board, the dollar pared its earlier gains against the Japanese currency, sagging 0.2 percent to 98.15 yen, well shy of a four-year peak of 99.95 yen struck on trading platform EBS on Thursday, but above Friday's low of 98.08 yen.
On Friday, the U.S. Treasury Department said in a semi-annual report on currency practices on major trading partners that it would press Japan to adhere to the commitment it made in February as a member of the Group of Seven and Group of 20 nations to let the market determine exchange rates.
However, many analysts are betting that the yen's slide will resume, in light of the Bank of Japan's radical monetary policy overhaul that will pump about $1.4 trillion into the economy in less than two years, although investors may be unwilling to move before a two-day G20 meeting beginning on Thursday.
On Friday, data showed that U.S. retail sales fell 0.4 percent in March, suggesting the economy may have faltered at the end of the first quarter.
Strategists and market participants say the pace of the dollar's upward progress against the yen will largely be determined by whether the BOJ's massive asset-buying prompts Japanese investors to increase their overseas investments, and the extent to which those investments will be unhedged.
Currency speculators decreased their bets in favor of the dollar in the latest week, according to data from the Commodity Futures Trading Commission released on Friday.
One potentially dollar-supportive factor is the escalation of tension on the Korean peninsula, and any negative developments on that front could prompt investors to buy back the U.S. currency.
North Korea has threatened for weeks to attack the United States, South Korea and Japan since the United Nations imposed new sanctions on the rogue state in response to its latest nuclear arms test in February, fueling speculation it might launch another missile.