Yen Edges Up on Jawboning Friday, September 15, 2006
The major currency pairs continue to consolidate amid a dearth of fresh economic news. Traders remain reluctant to commit to any trends and have kept the currencies confined to range trading in recent sessions. The dollar gave back some of its gains against the yen, but held firm versus the euro. The foreign exchange market is still in search for a clear trend to emerge following months of consolidation as a result of summer trading.
US Treasury Secretary Henry Paulson reiterated calls for increased flexibility in China’s currency regime. He said that maintaining overly rigid exchange rates subjects China to greater risk of boom-bust cycles. Paulson said that China must accept its role as a global economic leader, and as such must take responsibility in maintaining global economic health. He emphasized diplomacy as well, saying harmful political rhetoric should be avoided and instead take a strategic view of the relationship between the US and China.
China’s Premier Wen Jiabao responded to the press by saying the government has continued to press forward with currency reform and gradually increases exchange rate flexibility. Moreover, former PBOC Governor Dai Xianglong said that increased flexibility in the yuan’s exchange rate should be done so gradually in order to prevent excessive increase in foreign exchange reserves, which would result in problems for the central bank’s monetary policy.
Labels: Japnese Yen
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