Japan Says G-20 Accord Barring FX Devaluations Does Not "Rule Out Intervention" In The Yen
By Tyler Durden
One of the biggest unconfirmed secrets of recent market action was whether or not there was a Shanghai Accord in February, in which the G20 and central bankers decided to push the dollar lower to benefit China at the expense of Japan and Europe, both of whom have suffered substantially in recent weeks as a result of their own currencies surging, pushing local stock markets lower (and sending European banks sliding).
Earlier today, Japan’s government spokesman Suga came as close as possible to admitting that there was in fact a tacit “Shanghai Accord” agreement when he said that the Group of 20’s agreement to avoid competitive currency devaluation “does not mean Japan cannot intervene in response to one-sided currency moves.”
It got better: in an interview with Reuters Suga added that Japanese Prime Minister Shinzo Abe’s comment to the Wall Street Journal last week that countries should avoid “arbitrary intervention,” was misunderstood and does not rule out intervention for Japan, Suga said.
And yet it did rule out intervention until now? He clarified. “What the G20 is talking about is arbitrary intervention, which is different from responding to a one-sided move,” Suga told Reuters in an interview on Saturday.
So arbitrary is not really arbitrary if as a result of other arbitrary devaluations the market decides to focus on Japan… which sound oddly like Obama defending Hillary and explaining how confidential is not confidential.
As Reuters notes, some traders have said Japan cannot sell its own currency now, because the G20 warned countries in February to refrain from competitive devaluation. Suga, who coordinates other ministers in Abe’s cabinet, rejected this idea outright and said Abe’s remarks about arbitrary intervention in a Wall Street Journal interview last week were misunderstood.
“The prime minister’s comments were based on the G20 understanding that long-term manipulation of currencies is undesirable.”
As a reminder, the last time Japanese authorities intervened directly in the market was in 2011, when Tokyo got an explicit G7 consent to stem a yen spike driven by speculation that a devastating earthquake and nuclear disaster in March would force Japanese insurers to repatriate funds to pay claims.
What is fascinating is how weak even Japan’s attempts at verbal intervention have become.
The attempts at posturing continued:
Suga also rejected the argument that the adoption of negative rates was a sign the BOJ’s attempts to meet its 2-percent price target had reached a limit.
Abe is meeting foreign economists to prepare to host a summit of G7 finance ministers and central bank governors in May, where he will urge other countries to coordinate policies to accelerate global growth.
“The prime minister strongly believes G7 should lead the global economy with sustainable growth,” Suga said.
At this point Japan has become such a joke in trader circles, the nickname which we penned for Kuroda aka “Peter Panic”, appears to have stuck.
Source: Japan Says G-20 Accord Barring FX Devaluations Does Not "Rule Out Intervention" In The Yen
