News That May Move The Market Today

There's no major economic measures coming out today, so let's have a look at the news instead.

In an effort to prevent the yen from appreciating further, the Bank of Japan bought over $25 billion in US currency yesterday. This helped drive the yen back down to at least ¥81.83 to $1 and also increases the total number of yen in circulation, a goal consistent with the quantitative easing the BoJ has initiated. The G7 industrial nations have also agreed to intervene in the currency markets to help keep the yen from appreciating further by selling dollars, Canadian dollars, Euros, and so forth to Japan as needed.

Now, why are they doing this? Strong currency can be good for a nation, but it tends to restrict exports. Right now, Japan needs to bring currency into the country, and yen repatriation from selling internationally-held assets will only last so long. They will need to export goods and services, and the last thing they need is handicap their export quantities at a time when they need hard cash. (The counter-problem is inflation due to having too many yen in the marketplace, but the BoJ is confident they can soak that up when the time comes.) For some additional insight, have a look at this Reuters interview with Japanese deputy finance minister Fumihiko Igarashi, or these comments from various other Japanese officials.

Of course, the series of disasters plaguing Japan hasn't brought the troubles in the rest of the world to a halt. The United Nations has voted to approve the use of military force to prevent the Libyan government from fighting rebel forces in the newly-minted Libyan civil war. The vote was taken about 8 AM, and Reuters quotes French sources as saying that action could follow within hours. Even before the vote, Egypt's military government began shipping arms and ammunition to the rebels.

In the wake of the vote, CNN is now reporting that the Libyan government has decided on an immediate cease-fire in the civil war.

King Abdullah has, in an attempt to prevent protests and/or rebellion from breaking out in Saudi Arabia, ordered billions of dollars in handouts and government programs.

Monday, Saudi Arabia sent 1000 soldiers into Bahrain to assist the ruling monarchy in maintaining power[1]. The King of Bahrain, with that extra support decided to respond to weeks of protests by the nation's Shi'ite majority, by declaring a three-month "state of emergency" on Tuesday. This gives the defense ministry authority to impose curfews, disperse gatherings, evacuate areas, and use military force to break up protests.

[1] Interestingly enough, particularly in light of the US position regarding Libya, Secretary of State Clinton told Saudi Arabian Foreign Minister Prince Saud al-Faisal that "our advice to all sides is that they must take steps now to negotiate toward a political resolution".