Japan Pays for Low U.S. Interest Rates
All it took was a news report that the Bank of Japan was looking to scale back its purchases of dollars to rock the currency and U.S. Treasury markets earlier this week.
Tokyo officials were quick to deny the report in Japan's Nikkei Financial Daily newspaper, insisting that there is no change in foreign-exchange policy -- although currency traders say the central bank appears to have been intervening less, or making less-aggressive dollar purchases, over the past two weeks.
But some unsettling questions remain. Just what are the limits of Japan's -- and more broadly Asia's -- appetite for dollars? And what would be the effect on U.S. interest rates if that appetite begins to wane?
For the past few years, relatively weak currencies have helped sell Asian exports in the U.S. and kept Asian growth rates high in the process.
Yet economists warn that increasing calls for protectionism in the U.S. could lead to measures that would stem American demand for Asian goods. That in turn would mean fewer dollars for Asian central banks to invest in U.S. assets, primarily Treasury and agency bonds such as those issued by Fannie Mae and Freddie Mac.
Even without any protectionist steps, Asian governments may eventually decide that their best hope for growth lies not in exporting to the U.S., but in stimulating their own domestic economies. Such a policy move would also narrow the trade surpluses and provide Asian central banks with fewer dollars to buy U.S. bonds.
That means with everything else being equal, says David Bowers, global strategist for Merrill Lynch, U.S. interest rates could rise. "In order to attract new investment, the U.S. may have to pay a greater premium on their bonds," he says.
The circumstances in which Asian central banks the past few years have ended up holding hundreds of billions of dollars of U.S. government securities are based on two simple tenets: American consumers' voracious appetite for imported goods and Asian countries' desire to satisfy that hunger.
Americans have been importing more goods and services than they sell to foreigners. This creates a deficit in the U.S. current account, a broad measure of trade in goods and services, plus certain financial transfers. Because Americans don't save enough, they must rely on foreigners to finance the deficit.
Last month, Asian foreign reserves topped $2 trillion, at least two-thirds of which is thought to be held in dollars. Japan alone now holds some $777 billion in foreign reserves and was selling yen -- largely to buy dollars -- at the record pace of 10 trillion yen, about $92 billion, in the first two months of this year.
The bulk of those dollars are being spent on U.S. government bonds and bills, with Asian central banks holding an estimated $1 trillion worth as of the end of last year. Over the past year, Japan alone financed about 40% of net U.S. Treasury-market borrowing, according to UBS estimates.
But hoarding U.S. bonds is risky. Rates currently aren't far from their 40-year lows hit last year and their values would fall if U.S. interest rates rise or the dollar falls. Economists from Tokyo to Taipei are wondering how long the situation can last.
Beyond that, opinions about the impact of Asian intervention vary. Without the massive dollar buying, "you could argue that the dollar would be below 100 yen, and that the yuan would be 20% stronger," say Paul Chertkow, head of global currency research at Bank of Tokyo-Mitsubishi Bank in London. The dollar currently buys 108.30 yen, and China's yuan is pegged to the dollar. What's more, currency traders say that if it weren't for Asian intervention to bolster the dollar, the euro wouldn't have risen so high against the greenback.
Meanwhile, economists estimate that if it weren't for Asian purchases, yields on the 10-year Treasury note would be anywhere from a quarter to two full percentage points higher. John Butler, chief market strategist at Dresdner Kleinwort Wasserstein in London, opts for the lower end of the range. "One, central banks buy shorter-maturities rather than longer," he says. "Two, there is a feeling in the market that the Fed is unwilling to let bond yields rise dramatically, and it would make that very clear to the market if Asian central banks stopped buying."
Already, some Asian central banks are taking steps, albeit small ones, to diversify their massive dollar reserves. South Korea plans to hand up to $20 billion of its foreign-exchange reserves to private fund managers next year, to be invested wherever they can get good returns. And analysts are speculating that the government may slow its interventions on the foreign-exchange market.
China last year shifted $45 billion of U.S. Treasurys off the books of the central bank, using them to help debt-laden government banks increase their capital. It may use another $40 billion of Treasurys from its $416 billion in reserves for the same purpose in the future. And Taiwan, which had $224.8 billion of foreign reserves at the end of February, wants to help local companies buy machinery or license intellectual property from foreign owners with some of its reserves.
Japan, the biggest buyer of dollars, has different concerns. The country is still fighting deflation and interest rates remain close to zero. That means it costs the government next to nothing to raise the funds it uses to buy dollars. And to a country with near-zero interest rates, the returns available on U.S. Treasuries look good. In the last fiscal year, Japan earned about 1.9 trillion yen in interest income on the assets in its foreign reserves.
Moreover, since tweaking interest rates no longer works and public spending is being cut, buying foreign currencies -- and influencing the rate of the yen -- is one of the last ways the government and central bank can fight deflation.
Signs domestic demand is recovering in Japan take some pressure off the need to weaken the currency. Over the past several weeks, Japan has reported better than expected retail sales and industrial production, a rise in small-business confidence and domestic-machinery orders. "Japan is not out of danger yet," says Mr. Bowers, "but something is beginning to stir."
Meanwhile, the Japanese parliament is mulling legislation to raise the ceiling of 140 trillion yen on the amount of short-term debt the government can issue to fund dollars, an amount that is about 28% of gross domestic product. The government already has an estimated 85 trillion yen of that short-term debt outstanding. When Japanese interest rates do rise, the increase in interest payments could be crippling.
Many economists wonder if Japan could unload U.S. debt when it no longer wants to hold it, since the resulting crash in Treasury prices would damage the U.S. economy on which Japan's recovery is so dependent. "Japan is hard at work importing the U.S. deficit," says Kunji Okue, an economist at Dresdner Kleinwort Wasserstein in Tokyo. "That could be dangerous, since it may be impossible to unwind."
亚洲各国美元储备压力沉重
日本官员有力地平息了人们对该国即将结束去年以来大举买入美元行动的猜测。
然而，在这些本周初搅乱美国市场的传言消散之后，还有一个问题悬而未决：日本（实际上是亚洲）的钱袋到底有多深？
亚洲各国央行，尤其是日本央行(Bank of Japan)和中国人民银行(People's Bank of China)一直在日复一日地抛售本国货币，囤积了数十亿美元的外汇储备。
上个月，这些国家的外汇储备突破2万亿美元，其中据信至少有三分之二是美元。单日本一国的外汇储备就达到7,770亿美元左右，该国今年前两个月日圆抛售（主要买入了美元）总额创下10万亿日圆的空前高点。
其中大多数美元都用于购买美国国债，截至去年末，亚洲央行的美国国债持有量估计达到1万亿美元左右。瑞银(UBS)估计，过去的一年中，通过市场发行的全部美国国债中，日本买走了40%。
但是，一些亚洲国家的政府已经开始寻求其他途径或是使用其他货币来存放其庞大的外汇储备。从东京到台北，各地的经济学家都很想知道，这种外汇储备持续扩张的局面还会持续多久。
西太平洋银行公司(Westpac Banking Corp.)驻悉尼的首席外汇策略师兰尼(Robert Rennie)称，这种状况并不健康，但是很难想像各国政府将会采取何种退出政策。
对于亚洲大部分国家而言，购买美元有效地避免了其本币兑美元出现过度涨幅。本币走强会损害本国出口商的利益，而出口是多数亚洲国家的经济驱动力。随著这些出口商从海外赚回美元并兑换成当地货币，以及外国投资者购买亚洲股票或债券，亚洲各国的美元储备不断增加。
但是持有美元的代价十分高昂。亚洲各国政府不得不发行大量的本币来买进这些美元，然后又得通过出售债券的方法避免货币供应增加造成通货膨胀。持有大量的美国债券蕴含风险，因为一旦美国利率上调或美元汇率下跌，其价值将会缩水。
一些亚洲国家央行已然开始著手分散其储备资产，虽然力度并不大。韩国计划明年将多达200亿美元的外汇储备交由私人基金经理投资，面向任何能够获取高回报的领域。分析师猜测，韩国政府可能会放缓对汇市的干预。
中国去年出售了央行帐户上450亿美元的美国国债，用于帮助负债累累的国有银行扩大资本。它今后可能还会再动用4,160亿美元外汇储备中的400亿美元美国国债继续援助国有银行。台湾则希望使用部分外汇储备帮助当地企业购买设备或获得外国知识产权拥有者的授权。截至2月底，台湾的外汇储备为2,248亿美元。
美元的最大买家－日本则另有打算。虽然其经济已经开始出现复苏，但依然备受通货紧缩的困扰，利率仍接近于零。这就意味著日本政府几乎没有办法来筹集买入美元所需的资金。对于一个接近零利率的国家，美国国债所带来的回报显得十分诱人。在截至3月末的财政年度，日本外汇储备资产的净利息收入达到1.9万亿日圆，约合175亿美元。
此外，由于调整利率再也不能起到遏制通货紧缩的作用，而且公共支出正在削减，购买外币便成了各国政府和央行抵御通货紧缩的最后几根救命稻草之一。
诚然，日本也有力所不能及之处。议会正在考虑通过立法将为支撑购买美元而发行国债的最高限额提高至140万亿日圆，约占其国内生产总值的28%。日本政府发行在外的国债总额已经达到85万亿日圆左右，一旦利率上升，随之而来的利息负担增重可能会给该国造成致命性打击。
许多经济学家怀疑，日本在不再需要持有美国国债的时候能否如愿解除这些头寸。
Kleinwort Wasserstein驻东京的经济学家Kunji Okue表示，日本正在不遗余力地将美国财政赤字负担转入本国。这可能是相当危险的，因为它也许会无法解套。
