(eToro Blog) The Japanese government approved an extra 12.1 trillion Yen for reconstruction projects and to help companies struggling to survive under the weight of the strong Yen. The Japanese government has already allocated trillions of Yen on aid to keep Japanese companies competitive in the global market place as the Yen strengthened to all time highs. The USD/JPY traded briefly below 76.00 in August after a futile attempt by the Japanese to intervene in the currency markets. In August, the Finance Ministry sold 5 trillion Yen to weaken the Yen but the effect was short lived. The Japanese government has recently created a fund instead of intervening directly in the currency markets. The fund seeks to keep factory jobs in Japan instead of loosing them to cheaper offshore destinations.
The Japanese will sell about 800 billion yen of sovereign debt to fund the earthquake reconstruction efforts. The government has so far sold 145.7 trillion Yen to fund earthquake reconstruction efforts. Prime Minister Yoshihiko Noda approved the third supplementary budget today. The discussion in the Japanese Diet centered on the supplementary budget and taxes. The government will add 100 billino yen to each monthly auction of debt maturing in two and five years. The government currently sells 2.6 trillion yen in two-year notes and 2.4 trillion yen in five year notes every month.
On the European crisis, Japanese Finance Minister Jun Azumi said today that he was confident that European leaders would agree on a solution to the current crisis despite differences between France and Germany on key policy issues. Azumi said, “I see no change in the broad movement towards a resolution to the debt crisis, and I firmly believe that Europe will come up with a scheme that is convincing to markets and other countries before the G20 summit in Cannes.”
Markets in Asia traded in a narrow range on the last day of trading in the week before the weekend summit of European leaders. The Japanese Nikkei traded around 8,665, the Hang Seng around 17,979, the Shanghai index around 2,428 and the S&P ASX around 4,197 at the time of writing this report. Traders on OpenBook continue to be primarily long on the USD/JPY with limits concentrated around 78.00 and stops around 76.00.
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