TOKYO | Fri Aug 19, 2011 7:43pm EDT
(Reuters) - Japan is considering intervening in the currency market again to stem further yen gains after the currency's overnight ascent to a fresh record high against the dollar, the Nikkei newspaper said on Saturday.
If the yen continues to rise, Japanese authorities will step into the market to weaken the currency, and will seek understanding for its unilateral action from its Group of Seven counterparts, the paper said without citing sources.
Growing volatility in global markets has raised investors' appetite for safe-haven currencies like the yen, pushing down the dollar to a record low against the Japanese currency on Friday. It bounced back above 76 yen after falling below its previous record low of 76.25 set in March.
If yen rises persist, the Bank of Japan may also ease monetary policy to support government efforts to weaken the yen at its rate review next month or even earlier, sources familiar with the central bank's thinking say.
Is this a preference of Japan's debt/GDP ratio vs the US' debt/GDP ratio?
Or is the Yen a preferred base currency for carry trades because there is a higher degree of confidence among currency traders that Japan will do QE4Million if needed while the US Congress has made more asset purchases uncertain because they might limit what gets issued?
To me (who rides a "carry trades continue unwinding" hobby horse) the Yen strengthening has nothing to do with that being a good currency to store wealth (eg "safe haven") but more a good shorting base for the next round of trading.
So sayeth I - welcome any and all opinions because I like having my mind changed.