Biggest Credit Score Myths
September 4, 2011 by staff
Biggest Credit Score Myths, The yen is the third monthly gain against the dollar means that the Bank of Japan could decide next week to promote the injection of funds into the financial system as members of the policy of seeking ways to stop the strength of the currency and stimulate growth.
The central bank has eased the policy at least five times since December 2009; all advances yen following the previous month. The yen recorded a gain of 0.1 percent against the dollar last month and reached a post-World War II record of 75.95 per dollar on 19 August to Japan carried out its biggest intervention in the market currency in seven years. BoJ interest rate is the lowest in the world in a range from zero to 0.1 percent, and has not been above 0.5 percent since 1995.
A report this week showing a slowdown in Japanese industrial production was the latest sign that the strong yen is impeding economic recovery in three quarters of contraction. Net exports, or shipments of less import in the second quarter were the biggest drag on gross domestic product since 2009. The Bank of Japan will conduct a two-day meeting on 6 September, before a Federal Reserve meeting, which begins September 20.
“There is no doubt the greatest risk to the economy of Japan comes from foreign currency, you can say it is the most decisive factor for the BOJ policy,” said Chotaro Morita, head rate strategist in Tokyo at Barclays Capital Japan Ltd. One of the 25 primary dealers required bidding in the sale of public debt. “Additional Flexibility should be visible BOJ monetary policy because the U.S. can exert pressure on further appreciation of the yen.”
The central bank said on August 4th it was doubling the amount of public debt purchase through its program of asset purchases and the same day that intervened in the currency market for the third time in a year. The yen weakened to 80.24 per dollar the day before erasing all losses over the next three days.
4510000000000 JPY Japan sold (and $ 59 million) in August, a Finance Ministry statement this week showed the largest monthly amount since March 2004. Yoshihiko Noda, who has managed, Naoto Kan, as prime minister, oversaw operations and finance minister.
The demand for safer assets rose last month amid concerns about the U.S. recovery staggers and the debt crisis in Europe is worsening. Yields of 10-year government bond fell to a record 1.9735 per cent in the U.S. and a nine-month low of 0.97 percent in Japan on August 19, while the MSCI World (MXWO) Index of stocks fell 7.3 percent in the month, the most since May 2010.
The yen tends to strengthen during periods of financial stress, because exports depend on the Japanese economy does not need foreign capital to balance its current account, the broadest measure of trade. A stronger currency reduces the competitiveness of Japanese companies abroad and reduces the value of foreign exchange earnings when repatriated.
The extra yield investors demand to own Japanese corporate bonds rather than similar maturity government debt is 66 basis points below the peak year of 78 basis points on June 10, according to Nomura Securities Index Co. ‘s bond yield.
The extra yield investors demand to have two-year Treasury bonds rather than the Japanese equivalent slipped three basis points yesterday, at least since 1992, reducing the appeal of dollar-denominated assets.
BOJ Governor Masaaki Shirakawa said on August 4 that a “relatively high” correlation between the performance differences have two years and the kind of dollar-yen.
The central bank buys bonds currently in Japan with a remaining maturity of between one and two years through its purchase of fund assets. Barclays Morita “said the central bank might increase the amount of bond purchases or purchase long-term debt.
Some Fed policy makers favored a more aggressive action to stimulate the U.S. economy, minutes of its meeting on August 9 this week showed. The members, who were not identified, “he said that recent economic developments justify a more substantial” beyond the commitment made last month to keep its key interest rate at a record low to mid-2013.
U.S. GDP grew at a rate of 1 percent per year in the April-June quarter, down from 1.3 percent previously reported, the Commerce Department data showed last week.
“The Fed will do something in September to boost the economy, leading to further weakness in the dollar,” said Tsutomu Soma, a bond and currency dealer in Tokyo at Okasan Securities Co., another primary dealer. “We can increase the dollar against the yen short, without any fear in this environment.”
Japan’s benchmark 10-year bonds yielded 1.07 percent today, 10 basis points from the lowest level since November 9, amid evidence that the economy is struggling to recover from an earthquake record in March that caused collapses in a nuclear facility and power shortages across the country. Industrial production rose 0.6 percent in July from the previous month, the slowest increase since March, the Commerce Ministry said on 31 August.
“There is a real threat of a double-dip recession in the global economy,” reinforce the demand for bonds, said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp., which administers and 964 billion in customer deposits.
Credit-default swaps to ensure Japan’s sovereign debt for five years rose to 113 basis points on August 24, the highest since March 16, according to New York-based CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers market private negotiation. They were at 102.3 basis points yesterday.
The contracts pay the buyer face value if a borrower defaults on its obligations, less the value of the defaulted debt. A basis point is 1,000 per year and a protection contract and 10 million of debt.
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