Thread: Japan Goes Into Damage Control On Yen

Tokyo fails to ease market concerns over yen

By Michiyo Nakamoto in Tokyo

Published: January 8 2010 06:58
Last updated: January 8 2010 17:51

The Japanese government scrambled without success on Friday to calm markets and deflect criticism over comments on the yen by the new finance minister after his calls for a weaker currency sent markets on a rollercoaster ride.

Yukio Hatoyama, the prime minister, Naoto Kan, the finance minister, and other ministers sought to ease concerns but only further roiled the market. The yen, which fell 1.1 per cent following Mr Kan’s comments on Thursday, initially recouped some of its losses on Friday, but was later trading at Y93.77 to the dollar, the lowest level since August.

Mr Hatoyama appeared to chide Mr Kan for suggesting at his first news conference that a weakening to Y95 to the dollar would be appropriate, saying officials should not comment on exchange rates.

“As currency stability is desirable, rapid fluctuations are unwelcome,â€

Argentina sacks central bank chief

Redrado vowed to take the case to court [EPA]

The Argentinian president has dismissed the country's central bank chief, after he refused her order to use Argentina's foreign currency reserves to pay debt off parts of its national debt.

Christina Fernandez issued a presidential decree removing Martin Redrado from office on Thursday, citing misconduct and dereliction of duties.

"The decision was made because the central bank must keep functioning," Fernandez said.

Redrado's spokesman said that even though he had agreed to leave his office, "he will not resign" and will take the case to court.

Redrado maintains that the bank's charter stipulates he can only be removed by Congress.

'Violating autonomy'

Fernandez had ordered the central bank to use about $6.6bn in reserves to help cover $13bn in international debt falling due this year.

Opposition legislators and other critics accused Fernandez of violating the bank's autonomy by ordering it to use reserves to pay the debt, saying it could lead to a sharp increase in government spending.

Aldo Abram, director of the private economic think-tank, the Centre for Investigating Institutions and Markets of Argentina, said the central bank's original charter establishes its independence.

"That is, it doesn't take orders from [the executive] nor are its employees part of the government. Therefore, the president cannot seek their resignations," he said in a statement.

Fernandez's government argued that since it is ultimately the president's decision, skipping congressional action and firing Redrado directly was legal.

"There is no conflict of powers," Amado Boudou, the economy minister, said.

Government ally

Redrado was replaced by Miguel Pesce, the central bank vice-president, who will serve as interim president.

Pesce is a government ally and in comments to the state-run Telam agency, he signalled he would move ahead with the debt repayment fund.

"The only thing left to do is to implement [the president's order]", he said.

Fernandez's administration says it is trying to clear up the country's debt problems so that it can return to international credit markets that have been closed to it since a 2001 default on debt payments.

Argentina's debt obligations rise steeply this year to $13bn, and economists estimate a funding gap of $2bn to $7bn.

http://english.aljazeera.net/news/ameri ... 20179.html