Welcome to the Currency War, Part 6: Japan Gets Explicit !

• Welcome to the Currency War, Part 6: Japan Gets Explicit ! 
  by John Rubino, http://dollarcollapse.com/ 
  Forget about the fiscal cliff. December’s big story was the ascension of a new leader in Japan whose platform is aggressive inflation:
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  Global Currency Tensions Rise
  TOKYO — Japan’s incoming prime minister fired a volley into increasingly tense global currency markets, saying the country must defend itself against attempts by other governments to devalue their currencies by ensuring the yen weakens as well.
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  Shinzo Abe’s call comes as others including Bank of England Gov. Mervyn King warn that the world’s economic-policy makers risk becoming embroiled in currency spats that could heighten tensions among countries.
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  Mr. Abe on Sunday called on Japan’s central bank to resist what he described as moves by the U.S. and Europe to cheapen their currencies and noted that a yen level of around 90 yen to the dollar — it was at 84.38 in early Asian trading Monday, down from 84.26 yen late Friday — would support the profit of Japanese exporters.
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  “Central banks around the world are printing money, supporting their economies and increasing exports. America is the prime example,” said Mr. Abe, referring to the Federal Reserve’s policy of flooding the market with dollars by purchasing massive amounts of Treasury bonds and other assets.
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  “If it goes on like this, the yen will inevitably strengthen. It’s vital to resist this,” he said.
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  Mr. King, in an interview this month, said, “I do think 2013 could be a challenging year in which we will, in fact, see a number of countries trying to push down their exchange rates. That does lead to concerns.”
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  It was part of an effort by countries to preserve trade advantage, he said. “The policies pursued by countries for domestic purposes are leading to tension collectively.”
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  What is notable about Messrs. Abe’s and King’s comments is that the scope of global currency angst seems to be expanding. China, which manages its exchange rate to keep it closely aligned with the U.S. dollar, has long been the object of global criticism for its efforts to hold down the value of its currency in an attempt to boost exports.
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  Since the financial crisis, other countries — including Switzerland, Israel and South Korea — have ramped up their efforts to prevent their own currencies from getting too strong amid worries about their export competitiveness. Policy makers in Australia also are under increasing pressure to fight the rise of the Australian dollar.
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  Global central bank foreign-exchange reserves expanded to $10.5 trillion by mid-2012 from $6.7 trillion in 2007, according to the International Monetary Fund, a 57% rise in less than five years and a sign of how aggressively world central banks are stockpiling other currencies in an attempt to prevent their own currencies from getting too strong in the wake of the 2008 financial crisis.
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  The largest increase has been in Switzerland.
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  read more!

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