Dollar Declines to 12-Year Low Against Yen on Credit Losses

[Lone_Star_Dem]

Source: Bloomberg

March 17 (Bloomberg) -- The dollar fell to a 12-year low against the yen on speculation more banks will report credit- market losses after JPMorgan Chase & Co. and the New York Federal Reserve bailed out Bear Stearns Cos.

The U.S. currency also traded near a record low against the euro as traders speculated the Fed will slash interest rates one percentage point this week to avert a recession. The dollar set record lows against the euro the past four days as investor confidence tumbled, sending U.S. stocks lower for a third straight week and driving gold to a record high of $1,009 an ounce.

``The U.S. dollar will remain under pressure,'' Benedikt Germanier and Alina Anishchanka, strategists at UBS AG, the world's second-biggest foreign-exchange trader wrote in a March 14 week-ahead report. ``Easing monetary policy, ongoing uncertainties in the financial sector and rising fears of capital outflows are chief reasons for our short-term bearish outlook.''

The dollar sank to as low as 99.08 yen in Wellington after reaching 98.90 yen on March 14, the lowest since September 1995. It lost 3.5 percent last week, the most since November.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=a_1R_1zzPzQE&refer=home

[Bonobo]

1. In '95, that was based on the Yen's strength, not the dollar's weakness. nt

[Art_from_Ark]

15. Well, yes and no

In '95, Japan was still considered to be in its own bubble-induced recession. I think the high yen rate back then could be largely attributable the result of market manipulation because yen speculation was an easy way to make money for currency traders. I also think this was a sneaky way of getting rid of Japan's only Socialist prime minister (Tomiichi Murayama) to serve since 1955- make the yen unbearably high, blame the Socialist PM, get rid of him in early 1996, yen recovers to a more reasonable level.

Compare Murayama's term (June 30, 1994 to January 11, 1996) with the following yen-dollar table (enter Yen and US Dollar, and dates before and after Murayama's term):


http://www.oanda.com/convert/fxhistory

[ShockediSay]

2. Whaddya expect when an ideological war fbo Big Oil is fought

w/out the benefit of sound military planning {including an exit strategy}

and a doubling on the national debt {so the richy rich don't have to pay

their freight.} We are fighting this war on borrowed money!!!


Warren Buffet called this years ago {a little ahead of its time}.

[roamer65]

3. By the year's end, $1000 gold...

will seem like a real bargain. The Fed is going to try to print their way out of this mess, but it obviously will not work.

[slackmaster]

14. At some point people are going to get stuck with gold they paid too much for

I sold most of mine on March 4.

[swag]

4. Paul Krugman, Brad DeLong, and others are saying that a weak dollar

is one of the only things we've got going for us right now.

[Lone_Star_Dem]

5. It's a great thing for exports and for drawing in tourist from other countries

Overall I think the US has been given some beaks on imports even with our current weak dollar due to the volume of the market share we command. I don't know for sure how long that can be sustained if our currency continues to fall though. It's also good to pay back our debt at a reduced rate.

Right now I'm concerned what Japan will do if the dollar continues to fall against the yen. They don't have the room to drop their rates to offset the damage being done to their export driven economy. I believe their rates are already extremely low at 0.5%.

[Yukari Yakumo]

6. In regards to our exports...

What do we make anymore?

It seems damned near everything has been outsourced to China, India, and Mexico.

[Lone_Star_Dem]

9. I believe our main exports now are raw materials

Rather than manufactured products as it used to be in the past.

[Thepricebreaker]

7. So are your saying it was lower in Clintons 1st term? n/t

[Lone_Star_Dem]

11. The yen was stronger then

It was after this point when Japan was forced to write down some 68 trillion yen in banking debts and they were facing a deficit of some 130% of their GDP. Japan then began to cut their rates drastically (down to their current 0.5%) and depreciated the yen in hopes of increasing Japans export competitiveness and increasing their trade surplus. Being an export based economy they could benefit from a weak yen in more ways than one.

[Lydia Leftcoast]

12. Yes, but as Bonobo said, that was due to Japan's strength rather than

America's weakness.

[spinbaby]

8. Geez, under 100 yen

It was at around 120 yen the last time I was there.

[Supersedeas]

10. nothing to see....nothing to see

[slackmaster]

13. I happened to spend a week in Japan in the summer of 1996

It was pretty expensive, OTOH the conversion rate made calculations easy. 100 Yen = almost exactly $1.