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Japan warns of action over volatile currency, notes other nations too share the concerns

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2 weeks ago

May 7, 2024

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Japan warns of action over volatile currency, notes other nations too share the concerns

Japan may have to take action against any disorderly, speculative-driven foreign exchange moves, the government’s top currency diplomat Masato Kanda said on Tuesday, reinforcing Tokyo’s readiness to intervene again to support a fragile yen to control inflation.

“It is preferable for exchange rates to remain in a stable manner following fundamentals, and if the market is functioning soundly in this way, there is of course no need for the government to intervene,” Kanda, Japan’s vice minister of finance for international affairs, told reporters.

“However, when there are excessive fluctuations or disorderly movements due to speculation, the market is not functioning and the government may have to take appropriate action. We will continue to take the same firm approach as we have in the past.”

Tokyo is suspected to have intervened on at least two separate days last week to support the Japanese yen after it tumbled to lows last seen more than three decades ago.

Bank of Japan data suggested authorities spent more than 9 trillion yen ($58.4 billion) in defence of the currency, helping lift the yen from a 34-year low of 160.245 per dollar to a roughly one-month high of 151.86 over the span of a week.

Tokyo is estimated to have spent around $60bn during its last forays in the market to prop up the yen in September and October 2022.

The Japanese yen, which is down nearly 9 per cent on the dollar this year, was last trading around 154.19 in the Asian afternoon [07:39 GMT].

Japan is reluctant to intervene in the currency market considering its limited available dollar cash reserves and US Treasury Secretary Janet Yellen’s comments that such moves were acceptable only in rare circumstances, said Hideo Kumano, chief economist at Dai-ichi Life Research Institute.

“Kanda might have started a verbal warning early on, as he wants to fix the exchange rate pegged at around the lower 150 yen level against the dollar at least until around May 15” when the US consumer price index data comes out, Kumano said.

YIELD PRESSURE

Kanda, the top Japanese currency diplomat, said it is normal practice for a currency authority to not comment on whether it has carried out market intervention, when asked about recent speculations that Japan has conducted yen-buying interventions.

A weaker yen is a boon for Japanese exporters, but a headache for policymakers as it increases import costs, adds to inflationary pressures and squeezes households.

The yen has been under pressure despite the BOJ’s landmark decision to ditch negative interest rates in March as US interest rates have climbed and Japan’s have stayed near zero.

That dynamic has driven cash out of yen and into higher-yielding assets, with the pressure intensifying in recent months as expectations for Federal Reserve rate cuts receded.

Kanda noted that a number of countries in addition to Japan had expressed serious concerns about foreign exchange market volatility in a meeting leading up to a ASEAN+3 finance ministers and central bank governors conference in the Georgian capital Tbilisi last week.

ASEAN+3 groups the 10-member Association of Southeast Asian Nations (ASEAN) as well as Japan, China and South Korea.

“The current concerns are not confined to Japan,” Kanda said.

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

1 day ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

1 day ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

1 day ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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