Who Will support The Yen in 2011-2012?

The rising Yen, supported by what Armstrong characterizes as a black hole event, reflects a transition shift in confidence from the public to private sector. This rise is not to be confused with currency appreciations driven by the attraction of international capital. The transition from the public to private wave in Japan will ultimately lead to a sharp rising in government yields and falling Yen. While the world’s attention remains acutely focused on the troubles within the Euro Zone, it should be asking who will support the Yen in 2011-2012?

Eric,

Shifting Reserves

“I think we cannot rule out the possibility that the Japanese government” may need to shift part of its reserves to euros from U.S. dollars to buy the bonds,

Headline: Japan Will Buy Euro-Region Bonds, Joining China in Assisting Irish Bailout

Japan plans to buy bonds issued by Europe’s financial-aid funds, its finance minister said, joining China in assisting the region as it battles against a debt crisis that prompted bailouts of Ireland and Greece.

“There is a plan for the euro zone to jointly issue a large amount of bonds late this month to raise funds to assist Ireland,” Finance Minister Yoshihiko Noda said at a news conference in Tokyo today. “It’s appropriate for Japan to make a contribution as a leading nation to increase trust in the deal. We want to buy more than 20 percent.”

Source: bloomberg.com

Bob