Tags: japan | dollar | treasuries

Japan Minister: Unshakable Faith in Dollar

By    |   Tuesday, 16 Jun 2009 11:22 AM

While Chinese and Russian officials have heaped harsh words on the dollar and Treasuries in recent days, the Japanese show nothing but love.

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Japan’s Finance Minister Kaoru Yosano tells Bloomberg.

“So our trust in U.S. Treasuries is absolutely unshakable.” That’s a good thing, because Japan is the second-largest holder of those securities.

China and Russia have threatened to pull their reserves out of Treasuries. But Yosano’s remarks helped pull 10-year bond yields down from a seven-month high.

“We have complete faith in U.S. economic and fiscal policy,” Yosano says. “The U.S. dollar’s position as the world’s reserve currency isn’t under threat.”

“Japan is, of course, mindful that selling Treasuries will cause the yen to strengthen and that would hurt corporate profits,” Chotaro Morita, chief strategist at Barclays Capital Japan tells Bloomberg.

“Even with their strong ties, it’s possible Japan would consider selling U.S. Treasuries should the dollar say, halve in value.”

To be sure, some see a gradual decline of the dollar’s status.

"The evolution of a reserve currency would be exactly that, an evolution, not an overnight change," Joseph Trevisani, chief market strategist at FX Solutions, tells Reuters.

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While Chinese and Russian officials have heaped harsh words on the dollar and Treasuries in recent days, the Japanese show nothing but love.“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Japan’s Finance Minister Kaoru...
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2009-22-16
Tuesday, 16 Jun 2009 11:22 AM
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