The Star Online: Business
The Star Online: Business |
| Posted: 08 Aug 2011 05:55 PM PDT TOKYO: Moody's Investors Service warned Japan that ineffective currency intervention would be negative for its sovereign ratings and would not help it restore its finances, even as Group of Seven (G7) policymakers tried to show solidarity against market turmoil sparked by US and European debt woes. The warning was a shot across the bow for Japan, saddled with public debt double the size of its US$5 trillion economy, just days after the United States lost its top-tier AAA credit rating from Standard & Poor's. Finance Minister Yoshihiko Noda yesterday signalled Tokyo's readiness to continue intervening in the currency market to stem yen rises, citing a G7 agreement to jointly counter any excessive and disorderly exchange rate moves. Moody's, however, said that while Japan's solo currency intervention and monetary easing last week initially pushed the yen lower against the dollar, the effect proved shortlived and was a negative for the economy and its credit rating. "Yen strength has eroded the competitiveness of Japan's exports and hampered the economy's ability to sustain its recovery from the 2009 global recession," Moody's said. Currency and monetary policy action alone would not solve the bigger problems plaguing Japan, such as the huge cost for reconstruction from the quake and the nuclear plant disaster, as well as much-needed social welfare reforms to restore the country's fiscal health, Moody's said in a statement yesterday. Major ratings agencies have all put Japan's sovereign rating on negative outlook as the country struggles to balance the need to support its economy, hit by a deadly earthquake in March, and to fix its public finances, which are the worst among G7 economies. Moody's announcement came hours after G7 finance leaders signalled their readiness to take coordinated action against excessive and disorderly currency moves. A G7 telephone conference was arranged after worries of another US recession and concern about the eurozone debt crisis hit global stocks and pushed the yen up near record highs, as investors sought the currency as a safe haven. The yen's spike prompted Japan to sell 4.6 trillion yen (US$59bil) in the currency market last week and the Bank of Japan (BOJ) to ease monetary policy to alleviate the pain to the export-reliant economy. But the moves have failed to push the dollar sustainably above 80 yen the rate on which many manufacturers have based their earnings forecasts for the current fiscal year. It stood around 77.80 yen yesterday. "We will continue to carefully monitor market moves. We also confirmed the G7 stance on currencies," Noda said after yesterday's emergency G7 phone meeting. - Reuters For Another perspective from The Daily Yomiuri, a partner of Asia News Network, click here Latest business news from AP-Wire Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| Posted: 08 Aug 2011 05:52 PM PDT KUALA LUMPUR: The current global market reaction to the US sovereign-rating downgrade and seemingly lingering debt problems in the eurozone can best be described as an example of exaggerated irrational fear. "I think the global markets are over-reacting to the debt problems in the US and eurozone," Germany's Deputy Foreign Minis-ter Werner Hoyer told StarBiz. "One should not exaggerate the problems. What's necessary is that we are already seeing the respective countries moving aggressively on their reform efforts," he said. According to Hoyer, irresponsible remarks by politicians had partly to be blamed for the knee-jerk negative market reactions across the world to the US sovereign-rating downgrade and heightened concern of eurozone debt crisis spread. "We should work towards calming the irrational trends in global financial markets, and that means for politicians to tread more cautiously," he explained, adding that he believed that fundamentally, some of the economies had the capability and capacity to solve their debt problems in time. Standard & Poor's downgraded the US credit rating to AA+ from triple-A last Friday after the US government raised country's debt ceiling from US$14.3 trillion to US$16.4 trillion to avoid a default. Two other rating agencies, Moody's and Fitch, had, however, maintained their triple-A ratings for US debt. There were heightened concerns too over at the eurozone last week, as investors suspected of the debt crisis deepening and spreading to Italy and Spain after the European Central Bank (ECB) initially refused to extend a bond purchase programme to Italy and Spain. Yesterday, however, in an effort to calm jittery market nerves in the eurozone, the ECB pledged to buy Italian and Spanish bonds from the two countries. "I have full confidence in the ability of our American friends to reinvent themselves and get out of their troubles eventually," Hoyer said. It was the same sentiment he had towards some member countries of the eurozone due to the fundamentals of the respective economies. In Italy, for instance, the high debt rate came with high savings rate and that spoke of its domestic funding capacity, as the country also had very limited external borrowing. "Governments must embark on reform processes aggressively," Hoyer said, adding that there were two key areas on which countries with the European Union (EU) must focus. "First, we must continue the paradigm change in fiscal policy; an initiative that Germany started three years ago, and now spreading to the entire EU ... the name of the game is stop wasting money," he explained. "Secondly, productivity and competitiveness must be boosted along with job creation." Despite the apparent challenges that Western developed nations were going through, Hoyer said he did not foresee a double-dip recession happening. On bilateral trade with Malaysia, Hoyer said Malaysia, as an Asean member, was becoming increasingly interesting not only to Ger-many, but also to EU as a whole. He believed trade between Malaysia and Germany would double within the next few years, as both countries continued to increasingly ease trade barriers and seek to form a win-win partnership. According to the Malaysian Department of Statistics, exports to Germany in June stood at RM1.61bil, out of the month's total exports value to EU at RM5.79bil. Malaysia's June imports from Germany, on the other hand, stood at RM1.8bil, qualifying the latter as one of Malaysia's top 10 import sources. Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| Bank Negara deputy governor dies Posted: 08 Aug 2011 05:49 PM PDT KUALA LUMPUR: Bank Negara deputy governor Datuk Mohd Razif Abd Kadir passed away peacefully at 3pm yesterday with his family members and friends by his bedside. He was 58. Razif joined Bank Negara in 1976 and held several senior positions in the central bank throughout his career. Among his many responsibilities were the chief representative of Bank Negara's London office and director of Bank Negara's Bank Regulation Department, and director general of the Labuan Offshore Financial Services Authority from 1999. Razif also served as the first chairman of the technical committee of the Islamic Financial Services Board and was also on the board of the International Centre for Education in Islamic Finance and the board of Bank Negara. Full Feed Generated by Get Full RSS, sponsored by Used Car Search. |
| You are subscribed to email updates from The Star Online: Business To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
0 ulasan:
Catat Ulasan