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G7 Nations Intervene to Curb Yen's Rise

CNBC.com
Sunday, 20 Mar 2011 | 11:33 PM ET

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello, I'm Saijal Patel and you're watching "Asia Market Daily".

The Group of Seven nations have pledged to intervene in currency markets, to weaken the yen.

The commitment came as Japan stepped in to lower its currency, which hit a post-war record high yesterday.

Traders predict today's intervention by Japan could top September's record sales of 2 trillion yen.

But some analysts say the weaker yen might not be such a good thing, given imports are now likely to rise dramatically.

(SOT) Naomi Fink, Japan Equity Strategist, Jefferies:
"The import prices are going to be influenced by the actions on the yen. For every bit that the yen actually weakens, import prices get more expensive, and because of the disruption to nuclear energy, then Japan is probably going to need to buy quite a few resources, especially LNG, some people are saying we might see a five fold increase in demand for LNG."

Meanwhile, Japan's Economy Minister has responded to reports that the Bank of Japan may be asked to underwrite any reconstruction government bonds.

Kaoru Yasano says the BOJ won't be called upon to take any special steps.

The comments follow a report in a local newspaper that the government is preparing to issue more than 10 trillion yen in bonds to fund the rebuilding efforts.

Analysts though warn further quantitative easing could be a dangerous.

Lawrence McDonald says any potential upward move in interest rates would hurt Japan's budget, which is currently being funded by ultra low interest rates.

(SOT) Lawrence G. McDonald, McDonald Advisory Group:
The scary statistic that a lot of pros here in New York are talking about, is if you do the math and you look at, if you have a 100 basis point increase in interest rates. A 1 percent increase in interest rates. So a 1 percent interest rate increase in Japan over the next year because they're printing all this money to get out of this mess and eventually interest rates will go up with that kind of printing press. 1 percent interest rate increase in Japan will equal 25 percent of their tax revenues right now.

On to the nuclear situation...

Japan has stepped up efforts to cool reactors at the troubled Fukushima Daiichi nuclear plant, as droves of people continued to leave the area and the country.

CNBC's Michael Kearns reports.

(Package starts)

Military helicopters continued dousing seawater onto the nuclear complex, while water cannon joined the effort from the ground.

Unit 3, the one on the left, has been the focus of attention the past day or so, but there are concerns that Reactor 4 is also heating up and yet another unit's cooling pool might be leaking. The plant operator was also scrambling to complete a new power line that could help restore cooling systems.

Radiation fears have caused an exodus of foreign nationals out of the country, with airlines scrambling to cope.

Anecdotally, travelers say it's been near one-way traffic out of Japan, with inbound flights nearly empty.

(SOT) Barbara Turoff, American retiree living in Tokyo:
"I was going to go back anyway just for vacation but I'm leaving earlier because I'm concerned. I'm concerned because I really don't know the situation about the radiation. It keeps changing."

(SOT) Thibault Brex, French teacher in Japan:
"If there was a radioactive cloud we just wouldn't know if it would come into our town and with that you don't know or hear anything so you can't do anything, and that's something we absolutely can't control no matter what people say. I was more worried about the radiation than about the earthquake."

Some nations have started screening passengers arriving from Japan for radiation. About 25 people that landed in Taiwan were found to have slightly higher levels than normal.

Meanwhile hundreds more people were evacuated from Fukushima Thursday.

Some 70,000 people have already been cleared from the danger zone.

But while concerned about the immediate danger, some evacuees are already realizing that if there are high levels of radiation, it could be years before they'll be able to return home, if at all.

Michael Kearns for CNBC.

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As Japan's nuclear crisis continues to unfold, global leaders are reviewing their own nuclear energy policies.

Germany - for example - says it will speed up efforts to abandon the use of its controversial nuclear power plants.

However, Jack Spencer of the American think tank, The Heritage Foundation, says nations shouldn't rush to make any policy decisions, while the extent of the disaster is still unknown.

(SOT)
Jack Spencer, Research Fellow, Nuclear Energy Policy, The Heritage Foundation:
"Look this is going to spark a debate over nuclear energy. There's no question about that. But what I think we need to do is to not make any broad policy proclamations while this is still ongoing. There will be plenty of time for that debate moving forward."

That's the latest on the Japan quake crisis, "Asia Market Daily", I'm Saijal Patel from CNBC.

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