Exports from West Coast up in 2015 — down to Japan

Exports from West Coast up in 2015 — down to Japan

According to the U.S. Department of Commerce, baled hay and straw exports from the West Coast from July through November 2015 were 3,582,640 short tons, up 7 percent from the same period in 2014. The main reason for the increase was a 31 percent increase in alfalfa hay exports to China and stronger alfalfa hay exports to the United Arab Emirates and Saudi Arabia. Hay and straw exports from the West Coast to Japan were down 3 percent in 2015 compared to 2014, according to Japanese Port data. The work slowdown at West Coast ports early last year had a big impact on shipments, as Japanese buyers were forced to purchase hay in other parts of the world. These supplies, along with heavier shipments to Japan when the West Coast labor issues were resolved, resulted in an oversupply situation that reduced West Coast hay shipments to Japan in late spring and summer.

History Repeating in Yen Decline Reminds UBS of 1995: Currencies

History Repeating in Yen Decline Reminds UBS of 1995: Currencies

The currency market is experiencing a bout of deja vu, with the yen’s tumble to a 4 1/2-year low and the dollar’s rebound drawing resemblances to 1995.

Just as 18 years ago, the Bank of Japan is taking unprecedented steps to boost the economy and U.S. growth is showing signs of strengthening, raising speculation the Federal Reserve will temper its stimulus. Back then, the events marked the start of a three-year slide for the yen and a long-term bull market in the greenback that pushed the U.S. Dollar Index (DXY) higher in five of the following six years.

The year “1995 continues to offer striking parallels with current market developments,” said Mansoor Mohi-uddin, the Singapore-based head of foreign-exchange strategy at UBS AG (UBSN), the world’s fourth-largest currency trader as measured by Euromoney Institutional Investor Plc. (ERM) “The divergence between the two central banks will help keep pushing the dollar-yen higher.”

After weakening 15 percent this year, the yen is less than halfway through a drop that will take it to 120 in 2014, according to Mohi-uddin’s forecast. Group of Seven countries’ finance chiefs signaled acceptance of the yen’s slide after meeting late last week in Aylesbury, near London, as the BOJ tries to end years of deflation by flooding the financial system with cash.

Dollar Boost

At the same time, the greenback is getting a boost as U.S. jobs and housing rebound. The Dollar Index has risen 6.1 percent to a nine-month high of 83.941 today from this year’s intraday low of 78.918 on Feb. 1 as employers added an average of about 196,000 workers in the first four months of 2013.

“The recovery in the U.S. economy in 2013 is likely to provide a tailwind for yen-selling,” Taisuke Tanaka, the chief foreign-exchange strategist and head of fixed-income research at Deutsche Bank AG, the biggest currency trader in a Euromoney poll, said in a seminar in Tokyo yesterday.

The yen touched 102.76 today in New York, the weakest since Oct. 14, 2008. It declined 0.1 percent to 102.51 as of 12:35 p.m. in New York.

The pace of the yen’s drop has forced strategists to rush to catch up, cutting their estimates versus the dollar and the euro by the most among more than 50 currency pairs tracked by Bloomberg.

Analysts have lowered year-end forecasts for the yen by 17.1 percent since December, to 105 per dollar from 87, according to the median of more than 50 estimates compiled by Bloomberg. Mohi-uddin and Tanaka said they see it at 110 by the end of this year.

Buying Bonds

Against Europe’s 17-nation currency, the forecast has been trimmed 17.4 percent to 132 per euro from 109. Estimates are for the Japanese currency to fall to 110 to the dollar in 2014.

Mohi-uddin predicts the dollar will strengthen about 8 percent against both the euro and the British pound and more than 3 percent versus the Swiss franc. The U.S. currency was at $1.2902 per euro and $1.5215 to the pound. The franc was at 96.65 centimes per dollar.

The yen has tumbled about 9 percent since new BOJ Governor Haruhiko Kuroda said April 4 the central bank would buy at least 7 trillion yen ($68.5 billion) of government bonds a month to achieve a 2 percent annual inflation target within two years. The plan accelerated a decline kick-started by Prime Minister Shinzo Abe in November, when he called for “unlimited” easing to defeat deflation.

Turning Point

The effect of the central bank’s monetary is “so far, so good,” though a level of 110 yen to the dollar would be “too weak,” said Eisuke Sakakibara, a former Japanese vice-finance minister known as “Mr Yen” for his influence on exchange rates in the 1990s.

“It will probably weaken toward 105, but it will probably turn around in the range between 105 and 110, because the Japanese economy at this moment is very strong, and with a strong economy, a currency does not keep falling,” Sakakibara said in an interview.

“The difference in the policy outlook for Japan, where it’s uncertain it can achieve its inflation target by 2015 even after doubling the monetary base, and the Fed, where it’s standing ready to exit quantitative easing, is crystal clear,” said Daisaku Ueno, a senior currency and fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo.

Fed policy makers are buying about $85 billion of Treasuries and mortgages securities a month to foster the recovery. The median estimates of economists surveyed by Bloomberg is for gross domestic product to expand by an annualized 2.6 percent by year-end, while Japan’s inflation rate remains under 0.5 percent.

Unprecedented ‘Intensity’

“The current yen-bear cycle seems to have an intensity that we’ve never seen before,” Ueno said.

For UBS’s Mohi-uddin, the yen’s decline echoes the three-year depreciation that started in the mid-1990s, to a eight-year low of 147.66 per dollar in August 1998 from a then post-World War II record of 79.75 in April 1995.

That slide followed the BOJ switching its policy target to an overnight money-market rate for the first time to boost the effects of monetary easing. Investor concern that Japanese banks’ creditworthiness was declining and the impact of the Asian regional crisis also weakened the currency in the 1990s.

Intervention Halted

Japan and its Asian neighbors aren’t suffering from those problems now. And while Japan sold 4.96 trillion yen of its currency in 1995, according to Ministry of Finance figures, it hasn’t intervened in the foreign-exchange market since November 2011 following the currency’s climb to a record 75.35.

“We’re seeing yen depreciation from a fairly neutral valuation, even without intervention,” said Junya Tanase, the chief currency strategist at JPMorgan Chase & Co. in Tokyo.

The yen has weakened 21 percent in the past six months, making it the biggest loser among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The real effective exchange rate fell to 67.49 in last month, the lowest level since October 2007, data compiled by JPMorgan show. The gauge surged to a record high 121.53 in April 1995.

As Japan ramps up monetary easing, signs of an improvement in the U.S. are signaling less need for central bank stimulus in the world’s largest economy. Charles Plosser, president of the Fed Bank of Philadelphia, said this week that he favors reducing bond purchases that have pumped more than $2 trillion into the economy and weighed on the dollar.

“Before Governor Kuroda dropped the stimulus bomb, dollar-yen had been driven mainly by the performance of U.S. economy and Fed policy,” said Ueno of Mitsubishi UFJ. “The current cycle could be the first one to be driven by domestic factors.”

To contact the reporters on this story: Mariko Ishikawa in Tokyo at mishikawa9; Hiroko Komiya in Tokyo at hkomiya1

To contact the editor responsible for this story: Rocky Swift at rswift5


B. regards

Felix (Kyung) Seo

Japanese Yen by Jim O’Neill of Goldman Sachs

CNBC.com 05/04/13 4:53 AM ET
By: Reporting by Louisa Bojesen, Writing by Katy Barnato

Renowned investor Jim O’Neill ended his 18-year career at Goldman Sachs by forecasting the yen will continue declining, pushing through the key 100-level against the U.S. dollar.

“I can see the yen at 100 to 120 in the next 18 months, but getting through the 100-barrier is going to require a couple of trickier things,” O’Neill, the outgoing chair of Goldman Sachs Asset Management, told CNBC, in his last interview pre-retirement. “One, is that the U.S. is definitely doing better, and with it, acceptance from the U.S. that continual yen weakness is not going to be really bad for U.S. competitiveness.”

(Read More: Stocks Soar on Jobs Data, but Economic Dangers Lurk)

“Secondly, linked to that, that Japan is showing more domestic recovery, so that some of their Asian competitors do not freak out—obviously for South Korea, and for China, it is a big deal,” he said.

The yen has flirted with the psychologically important 100-level since early April, when the Bank of Japan Governor Haruhiko Kuroda unveiled a massive stimulus to help meet the central bank’s 2 percent inflation target.

(Read More: Why the Hype Over Dollar-Yen at 100 Is Overdone)

While O’Neill found international fame when he coined the term BRIC to describe the emerging economies of Brazil, Russia, India, and China, he was originally recruited by Goldman Sachs due to his success as a currency specialist. In particular, O’Neill successfully forecast the yen’s rise in the mid-1990s, and the euro’s decline in 2005.

“I really try and pride myself on the yen, because that is what led me to be hired by Goldman Sachs, my supposed success as a currency person in the ’90s,” O’Neill, told CNBC. “People think of me as Mr. BRIC, but currency is my first love, despite the fact it is like the world’s biggest fruit and vegetable stall. You can only be a hero for 15 minutes in something as transparent as the foreign-exchange market.”

O’Neill said the term BRIC remains valid 12 years on from his famous report, irrespective of the importance ascribed to other emerging countries like Mexico and Indonesia.

“In terms of sheer economic size, which is what the original idea of mine was, there are no other four emerging economies that can vaguely compete with them. … What all four share—and China is in a league of its own—is they are much bigger than any other emerging market,” he said.

Unexpectedly, O’Neill said the catalyst for penning “Building Better Economic Global BRICs” in 2001 was the Sept. 11, 2001, terrorist attacks.

“I concluded—perhaps a bit oddly, and occasionally to the annoyance of some Americans—that this kind of horror meant that going forward, if globalization were to thrive, it would have to be different. It could not be equated with Americanization. … In that sense, the BRICs thing does not just mean those four countries, it is a statement about a more complex world, needing better economic bricks.”

In his final research paper for Goldman Sachs, O’Neill reviewed his first BRIC report, and noted that global policymakers had yet to adjust to a world where emerging countries are key players.

“I still do not think many, outside Western multinationals and the BRIC policymakers themselves, truly understand the degree to which the world is changing. Global governance has perhaps moved in the right direction with the advent of the G-20, but it has not moved particularly far towards a more workable or effective condition,” he said in his last paper, entitled, “The world still needs better economic BRICs.”

O’Neill was cagey about his post-Goldman plans, having dismissed working for a rival investment bank in a previous CNBC interview, saying that working anywhere else would be “downhill.”

(Read More: O’Neill: I Wouldn’t Put My Family Money in Bunds)

He did say however that he had always planned to leave Goldman’s at the peak of his game.

“It is a really competitive, tough place, and to keep the place churning around, and the strength that it has, it needs to have turnover,” he said. “I did not quite fancy the phone call saying, ‘Isn’t it about time you call it a day?'”

B. regards

Felix (Kyung) Seo

Yen’s Fall Aids Japan, Worries Others

Yen’s Fall Aids Japan, Worries Others

WASHINGTON—The steep drop in the value of Japan’s currency is sending ripples around the world, fostering hope that the third-largest economy will awaken from its long slumber, though stoking fears in some countries that they could suffer.

The sharp depreciation of the yen—around 30% against the U.S. dollar since last September—also is reigniting concern that nations could be drawn into damaging currency wars in which governments engage in tit-for-tat devaluations to gain trade advantages.

Perhaps the nation with most to lose from the yen’s fall is South Korea, as it competes head-to-head with Japan to sell similar products, such as cars and consumer electronics.

“They’re very worried about it,” said Fred Bergsten, senior fellow at the Peterson Institute for International Economics, who spoke with several South Korean economic officials during their president’s visit to Washington last week.

The South Korean auto sector is “highly vulnerable” to Japan’s currency depreciation, according to a study by Deutsche Bank. The report said South Korea’s electronics business should be less affected.

South Korean Finance Minister Hyun Oh-seok has singled out the weakening yen as a problem for Korean exports, while the Bank of Korea cited the yen’s decline as one of the factors behind its decision to cut interest rates last week. Korean auto stocks have fallen sharply in recent days as investors fret over companies’ falling competitiveness.

Other nations aren’t as affected by Japan’s currency moves. Germany sells many of the same goods as Japan. But outside of luxury cars, those products don’t target precisely the same market segments.

“We’re not competing with Japanese producers,” said Franz-Georg von Busse, managing director of Lemken GmbH & Co. KG, who says his agricultural machines tend to be larger, with higher technical standards than those of Japanese competitors.

The falling yen may have other effects. The U.S. Congress is considering Japan’s entry into talks to create a giant Asian-Pacific free-trade bloc, which U.S. auto makers oppose. A weaker yen may make it politically harder for Congress to sign off on a deal, potentially delaying a key facet of the Obama administration’s trade agenda.

“The fall in the yen’s value “results in fewer American exports and jobs and is a further reason why Japan should not be included in the Trans-Pacific Partnership,” the American Automotive Policy Council, which represents the Big Three Detroit auto makers, said Thursday.

The Japanese currency is weakening on aggressive efforts by the government of Prime Minister Shinzo Abe to restart a moribund economy via looser money and other major policy changes. The yen weakened to 100 to the dollar Thursday, crossing a psychological barrier for the first time in four years.

The dollar continued to rally beyond the 100-yen mark early Monday, buoyed by bets that the U.S. Federal Reserve would be the first to dial back stimulus measures.

Japan’s latest data suggest the medicine is working. Figures last week showed Japanese banks are boosting lending, and profits are up at big Japanese companies, such as Toyota Motor Corp. and Sony Corp. The country’s current-account surplus was also the largest in a year, suggesting the softer yen may be bolstering exports.

While a growing Japan would help the world economy by adding demand, the country’s loose-money policy adds to worries that similar moves in the U.S. and elsewhere are diverting too much cash into emerging markets. Brazil, for example, fears capital inflows will pump up stock prices, strengthening its currency and making its exports dearer. Central banks in Australia and New Zealand moved last week to sap their currencies’ strength. Others in Asia are considering action, too.

The U.S. has trod a careful line on Tokyo’s moves. It is trying to encourage bold steps to revive Japan’s economy because that would aid the U.S. recovery. But it also wants to ensure Japan isn’t deliberately depressing the value of its currency for competitive purposes.

Finance ministers of the Group of Seven leading economies at a meeting over the weekend reaffirmed they would refrain from weakening currencies via monetary policies. Japan’s Finance Minister Taro Aso said G-7 members didn’t complain about the Bank of Japan’s monetary easing or the yen weakness. He said the dollar’s jump above the 100-yen mark wasn’t discussed. Bank of Japan Gov. Haruhiko Kuroda said the G-7 clearly understands Japan’s easing is aimed at ending 15 years of deflation and not at manipulating exchange rates.

U.S. Treasury Secretary Jacob Lew, speaking on CNBC Friday, said he would “keep an eye” on whether stimulus provided by the Japanese and other central banks is intended to improve domestic economic growth or weaken currencies.

Many economists see the yen declining even more this year. Capital Economics sees the currency hitting as much as 120 yen to the dollar in 2014.

-Nina Adam, Ian Talley and Alastair Gale contributed to this article.

Write to Thomas Catan at thomas.catan

B. regards

Felix (Kyung) Seo

Won Drops Most in Three Months as Yen Breaches 101; Bonds Fall

Won Drops Most in Three Months as Yen Breaches 101; Bonds Fall

The won dropped the most in three months on speculation South Korean authorities will favor depreciation to support exporters as the yen’s decline makes Japanese rivals more competitive. Government bonds declined.

The yen slid to 101 per dollar for the first time in four years, extending declines spurred by the Bank of Japan’s stimulus measures to fight deflation. BOJ’s aggressive monetary easing has a big impact on South Korea, Bank of Korea Governor Kim Choong Soo said at a briefing yesterday after the central bank unexpectedly cut its benchmark seven-day repurchase rate by a quarter percentage point to 2.5 percent.

The won fell 1.4 percent to 1,106.39 per dollar in Seoul, the biggest drop since Jan. 28, according to data compiled by Bloomberg. It dropped 0.8 percent this week. One-month implied volatility in the won, a measure of expected moves in the exchange rate used to price options, rose 108 basis points, or 1.08 percentage points, today and 69 basis points this week to 7.68 percent, the data show.

“As the yen continues to fall after breaching the 100 level, overseas investors are shedding emerging-market assets and buying the dollar,” said Park Hyun, a currency trader at Woori Bank Co. in Seoul. “Although it’s still uncertain about the intervention by the government, Governor Kim’s comment about the weak yen’s impact on South Korea made traders nervous.”

The won has strengthened 13 percent against the yen this year and weakened 3.8 percent against the dollar. That makes it harder for exporters such as Samsung Electronics Co. and Hyundai Motor Co. to compete against Japanese rivals overseas.

Financial Support

The government said on May 1 it will add 11.1 trillion won ($10 billion) of financial support this year for companies, including small- to medium-sized exporters, grappling with the sliding yen. The drop in the Japanese currency is a concern as it threatens market stability, Governor Kim said yesterday.

The yield on South Korea’s 2.75 percent government bonds due March 2018 rose one basis point today and 11 basis points this week to 2.63 percent, according to prices from Korea Exchange Inc.

To contact the reporter on this story: Yewon Kang in Seoul at ykang51

To contact the editor responsible for this story: James Regan at jregan19

Find out more about Bloomberg for iPhone: http://m.bloomberg.com/iphone/

B. regards

Felix (Kyung) Seo