Japan joins “Currency Wars”

The countrys exports plunged 10.3pc in September from a year ago, dimming hopes of rapid recovery in the Far East. Exports to Europe crashed 21pc. Shipments to China fell 14pc as the Diaoyu-Senkaku islands dispute led to a slump in car sales. Honda, Mazda, and Nissan all saw sales plunge near 30pc as Chinese consumers boycotted Japanese brands. Nomura said the export slump will push country into full recession.

Mr Redeker expects the yen to weaken from 79 to 84 by Christmas, reaching 90 next year. “We think Japan will no longer be able to fund government debt (JGBs) from domestic investors as soon as 2015. They will have to print money instead. They can’t afford to let bond yields rise because JGBs already make up 25pc of bank balance sheets. A rise in yields would set off a crisis.”

Whatever happens, Japan’s days as an export superpower seem numbered. Its once vast current account surplus has vanished altogether since the Fukushima disaster last year. The decision to abandon nuclear power has left the country reliant on imported fuels. It may face soon face a structural trade deficit. The workforce is shrinking ever year as the bulge in pensioners grows bigger. The currency has to give.

via Japan to join currency wars as exports slump – Telegraph.

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