Before the body is cold the MOF has announced they are no longer going to be intimidated by being called ‘currency manipulators’ and ‘outlaws’ by Paulson and are resuming the building of the USD reserves to support their export industries.
Bernanke’s beggar thy neighbor policy is being matched by real action- direct intervention- rather than interest rate rhetoric.
The move in the yuan suggest China has been doing much the same.
This will leave the eurozone all the more vulnerable as they are the only nation not using fiscal policy and ideologically cant buy USD, so the combination of a relatively high euro and weak domestic demand will keep them on the ropes while others recover.
By Kim-Mai Cutler and Stanley White
Dec. 18 (Bloomberg) — The yen weakened from near a 13-year high against the dollar after Japanese Finance Minister Shoichi Nakagawa signaled the nation is ready to intervene in the foreign-exchange market for the first time in four years.
“We will take necessary steps if needed” to limit the currency’s advance and protect the overseas earnings of Japanese exporters, Nakagawa told reporters in Tokyo. The dollar fell to an 11-week low against the euro on speculation the Federal Reserve’s near-zero interest rate policy will reduce the appeal of U.S. assets.