bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Japan's yen pain is setting the stage for regional gains, according to analysts.

  Yesterday, Tokyo had to intervene for the fourth time this year to weaken the currency after the tankan survey pointed to improving business sentiment.

 An estimated US$5 billion of yen was sold in the Bank of Japan's latest efforts to cap gains against the dollar.

 A series of interventions has allowed the region to enjoy the benefits of a stronger economy in Japan without suffering from the effects of break-neck appreciation.

 'If the Japanese economy is recovering . . . Japan will be absorbing more imports, which is positive for Asia,' Merrill Lynch Asian head of fixed income William Belchere said.

 'To the extent that the yen strengthens against the dollar and most of these [Asian] currencies have a loose dollar peg, it makes monetary conditions good for growth and asset expansion,' he said.

 It also promotes outsourcing and foreign direct investment.

 However, it is putting upward pressure on export competitors such as South Korea, which has also had to intervene recently to curb the soaring won.

 Most economists think intervention will safely keep the yen from pushing past the level of 100 to the dollar.

 'The market has a massive elephant trap around 100,' Jardine Fleming Securities (Asia) chief economist Chris Calderwood said.

 He pointed to the strength of government interventions and market expectations of such action.

 'These things do tend to feed on themselves to some extent,' he said.

 Merrill Lynch's chief economist in Tokyo, Jesper Koll, said the BOJ was spending about $10 billion a month to keep the yen above the 100 mark, and could continue to do so with ease.

 'Our friends at BOJ have had to intervene at a pace of $10 billion per month to keep the yen in the 103-108 range. They'll face that sort of pressure for the next three or four months. They can build reserves into infinity,' he said.

 Merrill and Jardine see the yen trending weaker by the end of the year as Japanese investment funds take advantage of higher interest rate returns overseas.

 'Right now the US bond yield looks very good and Japan's interest rate will stay low. That's why Japanese life insurance and other funds are bringing their money overseas,' Bank of America currency economist Frank Gong Fangxiong said.

 However, some fear that those outflows would not be enough to offset further strong inflows on the back of growing cross-border mergers and acquisitions and increasing stock market investments.



Yen woes provide benefits to region