Yen Downfall Continues as CPI and Housing Starts Decline

The lower consumer price data and decline in the housing starts fueled the decline in Yen and at same time increased prospects of higher profits of exporters sending the Nikkei up 206 points. The Yen has declined 4.5% thus far against the dollar this quarter. Bond prices increased as yields declined by 4.8 basis points.



[B]Japan Consumer Prices Fall, Jobless Is at 9-Year Low:
[/B]Japan’s consumer prices fell 0.1 percent in May, a pace of decline unlikely to deter the central bank from raising its benchmark interest rate. Consumer prices excluding fresh food decreased for a fourth month from a year ago. The drop matched the median estimate of 45 economists surveyed by Bloomberg News. Prices fell at the same rate in April and 0.3 percent in March, the steepest decline in two years.
Source: Bloomberg
[B]Fallen president looks to Japan:[/B]
He may be under arrest for corruption, but that isn’t stopping former Peruvian President Alberto Fujimori running in Japan’s elections. Mr Fujimori, who ruled Peru from 1990 to 2000, is under house arrest in neighboring Chile awaiting extradition to Peru. Peru wants him to stand trial for alleged embezzlement and human rights abuses dating from his rule, which ended under the weight of a huge corruption scandal. The Japanese party that will field him as a candidate for an upper house election next month yesterday described Mr Fujimori as a “Last Samurai” with extraordinary skills who could help Japan
Source: Herald Sun,21985,21985195-663,00.html
[B]Japan to discuss bullet train sale to Russia:[/B]
Japanese bullet trains may one day whiz across Russia, with talks expected next month on a possible sale of the technology as Moscow seeks to modernize its railways. Japanese government officials plan to travel to Russia to meet railway chief Vladimir Yakunin and other officials in July for exploratory talks on a possible sale of Japan?s ‘shinkansen? bullet train technology.
Source: Daily Times\06\29\story_29-6-2007_pg5_26
The Yen weakened further today as consumer prices fell. Tokyo core prices excluding food fell 0.1 percent from a year earlier. This increased speculation in the market that Bonk of Japan will keep interest rate on hold. The currency fell the most against Australian dollar. As of 3:00 am New York time USDJPY was trading at 123.41. The par was also pushed up earlier when the Federal Reserve kept benchmark interest rate at 5.25 percent as said that inflation is still a risk to the economy.

[/B]Japanese stocks closed higher as Yen continued to decline against its counterparts. Investors expect that lower yen will further boost the profits of the exporters. The Nikkei was up 1.15% closing at 18138.36. The world?s largest automaker, Toyota, rose 2.0 percent closing at 7,770 Yen. Both Credit Suisse and Deutsche upgraded Toshiba, as a result its price gained 3.2 percent today. Shares of all the auto part makers were also up. Amongst the major decliner was Nippon restaurant falling 5 percent to 3,830 yen.

The yield on the 10-year bond dropped 4.8 basis points closing for the day at 1.868 percent on speculation that investors are buying securities to match a monthly change in a benchmark index. The yield spread between the benchmark 10-year US and Japanese bonds widened to 3.22 percentage points today from 3.15 points at the end of last month.