In an implicit admission that the Japanese government is powerless when it comes to the devaluation of the yen, the prime minister and finance minister of the country changed their strategy and began to encourage businesses to use the country's strong currency as an opportunity to snatch up companies and assets abroad. Those who engage in currency trading for dummies know that high valuations of the yen hurts the profits of companies that are based in Japan.
In a rare show of support to the high yen, the finance minister of Japan, Yoshihiko Noda, emphasized yesterday that the strong currency has its strengths and suggested that local businesses use it to buy assets and foreign companies. In an interview with The Wall Street Journal on Saturday, Prime Minister, Naoto Kan, said, "I stress that we can benefit from the strong yen and investing in various funds abroad."
The government began to intervene in the forex market on Sept. 15 at the first attempt to weaken the yen in six years - consuming 2.125 trillion yen (U.S. $ 26.19 billion at current price) to buy dollars so far and you will get briefly Quote for 86 yen - but insisted on the Japanese currency rise again to levels close to record the last 15 years. Yesterday, the Japanese currency was near 81 per dollar.
Now, the most powerful politicians in the country are encouraging the Japanese business community to capitalize on the strength of the yen going shopping abroad.
Stock trading for dummies traders should look for companies that are takeover possibilities for Japanese firms.
"We must work to prevent [a high sustained in the yen], but there are also advantages when the yen rises," Noda said yesterday, the minister, during a session of Parliament. "Attitudes to buy foreign assets and foreign companies should be actively pursued, since the high of the Japanese currency cheapens those purchases, he said.
The value of mergers and acquisitions of Japanese companies abroad in the year so far has already surpassed the total 2009 and reached U.S. $ 28.1 billion, compared with $ 27.6 billion worldwide in 2009. And the year is not over yet: the Mitsubishi UFJ Financial Group Inc., Japan's largest bank, is close to finalizing an acquisition of portfolio financing of infrastructure projects of the Royal Bank of Scotland by 4 billion pounds ($ 6, 45 billion), according to people familiar with the situation. Less than two weeks ago, Marubeni Oil and Gas trading company Marubeni Corp. division., Announced it will acquire four oil and gas fields in deep waters from the U.S. Gulf of Mexico from BP PLC, for $ 650 million.
Major retailers, manufacturers of drugs and drink in the country are stuffed with cash and respect in the face of stagnant growth in its domestic market, are on the lookout for attractive assets abroad.
The government is also considering more creative ways to encourage Japanese companies to make acquisitions outside.
As part of the economic stimulus package proposed by the ruling party, of 5.1 trillion yen, Japanese politicians have also introduced measures to support business investment abroad to take advantage of the strong yen by buying the best stocks for dummies in the United States open market.
With the support of government resources, including the country's international reserves, the Finance Ministry is expanding the scope of state financing of the Japan Bank for International Cooperation - traditionally used to fund huge infrastructure projects in developing countries - to include loans to private companies interested in doing business in developing countries, when necessary.
The BJCI loans can now be used to build infrastructure related to water resources or renewable energy plants, and power plants and high-speed trains.
Among the projects that could help finance BJCI are acquisitions of foreign companies, as well as the creation of subsidiaries in other countries, if one considers that these measures will contribute to maintain or strengthen the international competitiveness of Japan, said a ministry official Finance.
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