Japan Intervenes to Stem Yen's Rise

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

Hello to our viewers all over China.

You're watching "Asia Market Daily", co-produced by CCTV Business Channel and CNBC, first in business worldwide.

I am Saijal Patel and here are the top stories across Asia today.

The Japan government takes a major step, dipping into the foreign exchange market for the first time since 2004. The intervention is to cap the yen's surge to its strongest against the dollar in 15 years.

Finance Minister Yoshihiko Noda confirmed the intervention, saying Tokyo was also communicating with authorities overseas, and indicated that Japan acted alone. Traders say the Bank of Japan first bought dollars at around 83 yen and intervened intermittently. That help the currency decline by more than two percent against the dollar at one point.

(SOT) Emmanuel Ng, Currency Economist, OCBC Bank:

"We think that the BOJ has to leave a large enough footprint on the intervention front, to actually to get the markets to back off a little bit in the short term."

The move comes a day after Prime Minister Naoto Kan won re-election as the head of Japan's ruling party, beating a candidate who had specifically called for intervention. The business community had also been calling for government action to stem the yen's rise. But there are others who think Japan needs more than a weaker yen to move ahead.

(SOT) Lee Boon Keng, Managing Director & Senior Advisor, Julius Baer

"Now maybe what they're trying to do is to prevent it from rising too fast. But at the end of the day, what's important to Japan, I don't think it's a weak yen. What's important to Japan is really how they are going to resolve this whole JGB problem they are having. Now China is coming in very nicely, to put in a little bit of its support in the event that if Japan ever wants to get out of deflation, there's some support for the JGBs. I think the biggest worry now for Japan really is how are they going to finance the fiscal spending that's going to prop up the economy over the next few quarters."

Japan's move to weaken its currency also gave a boost to Asian stocks. The benchmark Nikkei 225 led the pack and gained more than two percent, closing at one-month high. Exporters, including Canon and Toyota led the way up and other blue chips also followed suit.

Meantime, South Korea's KOSPI finished half a percent higher. Spotlight was on Shinhan Financial which slid after it suspended its CEO who is under investigation for embezzlement.

In Australia, shares briefly set a new four-month high with gains across most key sectors. At the end of trading day, the S&P/ASX 200 was up by 0.8 percent.

Gold miners among the biggest gainers as the precious metal hits a new record.

National Australia Bank also rose after the lender says it's giaving up its bid for insurer AXA Asia Pacific.

Later today, U.S. Congress will start its two-day hearing on China's exchange rate policy.

Two issues that will be up for consideration -- whether China has made material progress in allowing appreciation of its currency and the second if any action needs to be taken to pressure Beijing to speed up currency reforms.

Even as the issues are taken up in Washington, the yuan has been hitting fresh highs against the dollar in the last several sessions, and it has appreciated by about a percent since June 10, when Beijing announced that it was loosening the peg to the US dollar. But, that doesn't seem to be enough for the U.S.

(SOT) Francis Cheung, Head of China-HK Strategy, CLSA:

"You need to separate the politics and the reality. The reality is that if you appreciate the yuan, it's not going to solve the trade surplus problem. No one is disputing that the yuan is under-valued, but the best thing that China can do is to make sure its economy is strong, and gradually appreciate the RMB."

U.S. lawmakers still argue that Beijing is deliberately pursuing a policy of under-valuing the yuan by as much as 40 percent. The IMF on the other hand, estimates that the Yuan is undervalued by between 5-and-27 percent. Treasury Secretary Tim Geithner will be giving his testimony on China's exchange rate policies on Thursday.

It's been two years since Lehman's collapsed. What followed was market turmoil... And then a financial crisis that changed the face of the business world.

(SOT) Richard Fuld, Ex-Chairman of Lehman Brothers:

"Nobody, including me, anticipated how the problems that started in the mortgage markets would spread to our credit markets and our banking system and now threaten our entire financial system and our country. Lehman Brothers got caught in this financial tsunami."

Since then regulators around the world have imposed new restrictions on the financial sector to prevent another crisis. This past weekend, global banking watchdogs met in Switzerland to thrash out the Basel III agreement which says banks must hold twice as much capital as they did before the financial crisis.

One of the survivors of the crisis - Bank of America. After absorbing Countrywide and Merrill Lynch, Bank of America has emerged a more streamlined and focused bank. CNBC's Maria Bartiromo spoke exclusively to CEO Brian Moynihan and asked about BOA's efforts to meet more stringent capital requirements under Basel III.

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Moynihan: We don't need to raise capital for basil three and the fifth was as we look forward we're going to drive good consistent growth and turn that into good returns if our shareholders and take some of the volatility out of the past.

Bartiromo: Basel has been the headline for us covering it at CNBC as well. Can you categorically say though, that there aren't going to be any divestitures of assets as a result of, you know, adhere adhering to the Vockel rule or the new requirements?

Moynihan: We're not divesting things because of Basel III. We've sold some positions, streamlined a franchise here and there, but this is optimizing. The core thing of what we do customers, people like you and me, companies, institutional investors, the integration of Merrill Lynch, and Bank of America, that's all solid and going forward. They came along as the rest of all these thing we acquired that aren't as important that we've been fine tuning. We're pretty much done with that. We'll keep work on that. Think about it, our job as those three customers bases and we're focused on them and anything we do that distracts from that is not good. So that's what we've been working on last nine months, simplifying the place to make it more clear.

Bartiromo: Obviously you have an amazing vantage point in terms of lending and credit. How's the consumer doing today?

Moynihan: The consumer is doing pretty well. We've seen our credit trends continue to be positive as we went from second quarter to latter part of the year you've seen the consumer spending in our franchise up year over year. Traditionally down August/Sept because of back-to-school but it's down same range as it's down any year. The consumers are hanging in there. The unemployment numbers are stable. That's not a good thing because we got to bring them down. But in the broader contest, the number of people aren't increasing which puts stability in the consumer base. So the consumers are doing fine. We've been pleased by that. It was, you know, eight quarters ago, it was a different story. All that is largely behind us and we're working it down.

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Before we go, we bring you the most widely anticipated game of the year - Halo: Reach - the last installment in Microsoft's money making franchise, hit the shops. CNBC's Julia Boorstin enters the alien world with this report.

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A major video game launch in what could be the biggest video game of the year. Halo Reach, the fourth in Microsoft's popular Halo series is expected to sell some 7 million games this year alone, on track to be the biggest ever game from the maker's franchise. Hardcore gamers lined up for the midnight launch. This Gamestop 4000 others across the country, 60 bucks for standard game to $150 for the special edition. The Halo franchise has sold 34 million units worldwide. And the...analysts are counting on it to revive the whole industry and reverse the decline in video games sales... off 14% in August, the lowest level since 2006. (Insert SOT) More important, selling the game, Bhatia said Halo would drive sales of Microsoft Xbox consoles, expecting twice the usual number to sale in the next month. Based on early sales and pre-sales, analysts said this game is on track to be one of the bigger games in the year, certainly living up to expectations. I'm Julia Boorstin, from CNBC Los Angeles.

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Halo Reach, game of the year. It's the best man, can't help it. Most anticipated game. I have been waiting for this game to come out for awhile.

(SOT) Arvind Bhatia, Managing Director, Sterne Agee:

"We think this is temporary. We think the industry will start to revive here in the second half and perhaps 2011 can be a good year with some of the titles that we are hearing coming out."

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

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