Currency Wars Entering New Stage; Korean Government Reviewing All Possibilities On Curbing Capital Inflows; U.S.-Japan Currency Warfare

For the mercantilist countries like Korea and Japan, the currency issue is a matter of sovereignty.

From Bloomberg:

Japan sold yen today, causing the currency to weaken more than 4 percent against the dollar after rising 5 percent last month.

“We seem to be entering a new stage of the currency wars where it’s not just the emerging markets that are responding to broad dollar weakness,” said Callum Henderson, global head of currency research at Standard Chartered Plc in Singapore, who has written books on currency markets. “Expect much more intervention in the future and further acrimony in terms of how the U.S. dollar is doing.”

Brazil’s Mantega said Nov. 30 that his nation’s currency was trading at a reasonable level as Europe’s worsening debt crisis brought a “temporary truce” to a global currency war. Since then, the real has gained about 10 percent against the dollar, and Mantega said last month that the so-called war was still on.

South Korea’s government is reviewing “all possibilities” on curbing capital inflows, Finance Minister Bahk Jae Wan told reporters in Seoul today, adding that he’s “closely monitoring” the situation, while declining to comment on the impact of Japan’s intervention.

The Philippines is prepared to impose controls to cap volatility in the peso after its currency rose to a three-year high this week, central bank Governor Amando Tetangco said in an e-mail late yesterday. The bank “will not go against the fundamental currency trend but will not hesitate to use tools, including imposing prudential limits on certain transactions of banks,” he said.

http://www.bloomberg.com/news/2011-08-04/currency-wars-enter-new-stage-as-chances-of-fed-asset-purchases-escalate.html

From Zero Hedge:

According to Credit Suisse, this is just the beginning of Transpacific central banking warfare. Per Dow Jones: "The Japanese Ministry of Finance's JPY-selling operation Thursday may be the first in a series of interventions over the coming weeks to curb further rises in the unit, and may have come Thursday in part as the Swiss National Bank's move Wednesday to weaken its own currency made it easier for Japan also to step in, says Koji Fukaya, director of fixed income and global foreign exchange research at Credit Suisse. "This may be the start of a number of actions, depending on the yen moves in the weeks ahead," Fukaya says.

http://www.zerohedge.com/news/more-2011-us-japan-open-currency-warfare-just-beginning