Japan to invest in euro values

From left to right: Mr Mario DRAGHI, President of the European Central Bank; Mr Jean-Claude JUNCKER, Luxembourg Prime Minister; Mr Michael NOONAN, Irish Minister for Finance.

From left to right: Mr Mario DRAGHI, President of the European Central Bank; Mr Jean-Claude JUNCKER, Luxembourg Prime Minister; Mr Michael NOONAN, Irish Minister for Finance. (EU Council photo library).

Japanese minister of Finance Taro Aso early on Tuesday 8 January said his country will invest some of its huge foreign reserves in European Stability Mechanism debt paper. Japan is second only to China in foreign-exchange reserves with $1,274,160 million. Chinese foreign reserves are anything around $3.2 trillion.

Almost instantly after the Taro statement the single European money reached 131.26 American cents from 131.11 early on Tuesday. He also added that the placement could be realised even within the day, and recognised that ESM bonds along with other euro denominated debt paper are a must in managing his country’s foreign reserves.

It is interesting to note that Japan comes out with such a direct statement in support of the European single currency, an announcement which was long awaited in Brussels. Similar statements have being issued by Chinese top government officials during 2012.

The upwards movement of the euro/dollar parity came today despite two negative developments in the real economy. According to the German Statistical Authority the November foreign trade surplus in goods shrunk slightly to €14.6 billion after reaching €14.9 billion in October. This was an unexpectedly downwards turn because key economists were predicting an increased to €15 billion.

German exports decreased by 3.4% in November after a slight increase of 0.2% in October. Imports shrunk also by 3.7% in November after an increase of 2.9% in October. Foreign account surplus however, containing also capital transactions, reached €15.3 billion in November in comparison to only €13.2 billion in October.
As for Eurozone’s unemployment data published by Eurostat later this morning they showed a slight deterioration to 11.8% of the working population without a job in November, in comparison to 11.7% in October. This was expected given that Eurozone was at the time in a worsening recession situation.

In any case the euro/dollar parity favoured once more the single European money, after Japan announced this long awaited move to increase its investments in euro denominated values.

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