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Japan may intervene on yen again, BOJ should ditch easy policy – ex-financial diplomat

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Japan may intervene on yen again, BOJ should ditch easy policy – ex-financial diplomat

Takehiko Nakao, former vice finance minister for international affairs and former president of Asian Development Bank, speaks during an interview with Reuters in Tokyo, Japan December 27, 2022. REUTERS/Issei Kato/File Photo Acquire Licensing Rights

TOKYO, Sept 20 (Reuters) – Japan could intervene again to support the yen if it declines further, former top currency diplomat Takehiko Nakao told Reuters on Wednesday, and said the time is right for the Bank of Japan to ditch or modify its ultra-easy policy settings.

The former vice minister of finance for international affairs said prolonged monetary easing risks depreciating the yen further.

“There may be views that the intervention is not imminent as the depreciation has not been so rapid compared to the last time when authorities intervened in September/October,” he said.

“But it’s fully possible the authorities will conduct intervention in case the yen weakens further.”

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Japan spent more than 9 trillion yen ($60.88 billion)intervening in currency markets last year to arrest the yen’s decline, buying yen in September and October – first at levels around 145 and again at a 32-year low just short of 152.

The yen is currently trading around 147.77 against the dollar.

Nakao, who served as top currency diplomat from August 2011 to March 2013, oversaw a heavy intervention in 2011 by buying the dollar to stem yen strength in the wake of the U.S. Federal Reserve’s quantitative easing, which made Japanese exports less competitive.

While the situation is reversed now with the yen sharply weaker, the benefits accruing to Japanese exports have been offset to some extent by the dramatic surge in prices of imports and the cost of living. The prolonged monetary easing has also been criticised by investors as distorting markets and hurting bank profits.

A weak yen is seen as a byproduct of Japan being the outlier of the global trend of monetary tightening. While the BOJ has continued powerful monetary stimulus, the Fed and other major central banks have raised interest rates to fight inflation.

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At the two-day meeting ending on Friday, the BOJ is expected to maintain its yield curve control (YCC) targets at -0.1% for short-term interest rates and 0% for the 10-year bond yield.

Nakao, now chairman of the institute at Mizuho Research & Technologies and maintains close contact with incumbent policymakers, argued that the central bank should tweak its ultra-easy policy sooner rather than later.

“In the face of the ongoing headline inflation and excessively weak yen, the BOJ may have no choice but proceed with monetary policy normalization, including exit from negative rate policy and yield curve control, so as not to fall behind the curve,” he said.

“Given that JGB yields remain stable and the inflation is on the rise, now is the chance to tweak yield curve control.”

($1 = 147.7700 yen)

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Reporting by Tetsushi Kajimoto and Takaya Yamaguchi
Editing by Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

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US high schoolers want financial education, but many schools don't offer it: survey

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US high schoolers want financial education, but many schools don't offer it: survey

A recent survey by Intuit found that U.S. high school students want to learn about personal finance in schools but that many lack access to such courses at school, while parents may be reluctant to teach their children about financial literacy.

Intuit’s Financial Education survey found that 85% of U.S. high school students said they’re interested in learning about financial topics at school and that 95% of those who currently receive a financial curriculum find it helpful.

“Ultimately, what we learned is that 81% of students said they really try to discuss financial topics with their parents, but parents typically aren’t necessarily comfortable for a variety of reasons in having those types of conversations with their kids,” Dave Zasada, VP of education and corporate responsibility at Inuit, told FOX Business in an interview.

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“It might be that they’re not financially savvy themselves, which would align with national data around financial literacy rates in adults,” Zasada said, pointing to data that found just 34% of adults can pass a basic financial literacy quiz. “But also, we find that 88% of parents feel financial education should actually be taught in schools.”

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Intuit’s survey found that students who receive financial education school overwhelmingly thought it was useful. (iStock / iStock)

“I think what we have found in talking with kids and doing the survey and talking to parents is that the consensus is if they’re going to get it from one source, and for it to be a reputable source, it’s most likely that kids will want to get that while they’re in school and ideally taking a personal finance course,” he added.

Financial terms that were the most misunderstood by students were stocks and bonds (53%), 401(k) and retirement (45%) and taxes (28%). The top three things high school students wanted to know about managing their finances were how to become wealthy (43%), how to save money (40%) and how to avoid debt (37%).

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“A really high percentage of students were interested in those particular topics, but they also just simply want to understand the basic terms – they want to be able to speak the language,” Zasada noted. “The vast majority of students can’t speak that language by the time they walk across the graduation stage and are ready to start making some personal financial decisions that are going to impact them long-term.”

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Financial terms that students had the least understanding of were stocks and bonds, 401(k) and retirement, as well as taxes. (iStock / iStock)

While students may lack access to financial literacy education at school or at home, the survey found that about one-in-five are turning to social media. It found that just 19% of students turned to social media platforms for information about personal finance and that of those who do, 59% said they’re not always sure that they can distinguish accurate financial advice from bad or inaccurate advice.

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Students were most interested in learning how to become wealthy, how to save money and how to avoid debt. (iStock / iStock)

Intuit offers a free financial education platform that was launched in September. Zasada said it provides about 150 hours of content across two courses – one focused on personal finance and the other on entrepreneurial finance.

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“It’s customizable, very plug and play for a teacher. If a teacher wants to use our content for a whole course they can, and if they want to just dip in and focus on taxes during tax season they can just pull that information out,” he said.

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“We don’t just focus on trying to help kids become financially literate, we try to help them become financially capable and confident as well,” Zasada said. “We do that by, first, helping them to speak the language – understanding terms and concepts.” 

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Deadline looms for Bucyrus Bratwurst Festival to submit financial records to City Council

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Deadline looms for Bucyrus Bratwurst Festival to submit financial records to City Council
BUCYRUS, OH (CRAWFORD COUNTY NOW)—The Bucyrus Bratwurst Festival, is at a crossroads today as the deadline to submit their financial records to the Bucyrus City Council Finance Committee arrives. This comes amidst a growing movement within the council to reassess the financial assistance provided to the festival. Since 2018, the city council has been offering
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Gulke: What's Causing All the Volatility in Commodity and Financial Markets?

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For the week, May corn was 1¼¢ higher, December corn lost ½¢ and May soybeans dropped 11¢. November soybeans lost 8½¢, May soybean meal was up $11.30 per short ton and May soybean oil fell 300 points. May Chicago wheat was 11 ¼¢ lower, May Kansas City wheat was up 7½¢ and May Minneapolis wheat lost 5¼¢. December cotton was down 253 points and June DOW futures lost 963 points. 

It was another interesting week in the markets with increasing volatility in the commodity complex and the stock indices. Where is all the volatility coming from?  Jerry Gulke, president of the Gulke Group points to a couple possible clues. 

The April WASDE was a disappointment as Gulke says USDA failed to make some key adjustments to the supply and demand tables. First, the 50-million-bushel drop in U.S. corn ending stocks failed to account for the disappearance in the Quarterly Stocks Report. 

However, USDA also kicked the can down the road on the South American crop leaving Brazil corn production at 124 million metric tons, 13 million above Conab.  They also left Brazil soybean production at 155 million metric tons verses Conab’s 146.5 million.

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USDA punted on Argentina’s soybean production leaving it at 50 mmt. The agency did lower their corn estimate by 1 mmt, but the Rosario Grain Exchange cut the crop 6.5 mmt to only 50.5 million.

Gulke says this is a big divergence. 

“Some people are going there that are boots on the ground and are saying yes, we have a problem in Brazil and now we have issues in Argentina with disease and insects,” he says. “At some point in time, we’re going to find out that I’m wrong, other people that are commenting on it now are wrong and USDA was right. Or USDA is going to have to bite the bullet somehow and say yeah, the crop turned out to not be as good as we first thought.”

So, when will USDA rectify this discrepancy? Gulke says it’s hard to know, but USDA officials have told him they aren’t in the business of speculating. So, he thinks they’re scared to make a prediction without hard evidence.

However, he says, if he is right, “What did it cost the American farmer? Because price discovery wouldn’t have pushed the prices to lows we saw at the end of February.”  

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Gulke says volatility is also coming from the plunge in the stock market which is down nearly 1,900 points the past two weeks. He says the charts were providing sell signals or a correction back in February, and now it is finally coming to fruition. The uncertainty of a Middle East war and thoughts that interest rates will stay higher for longer due to stubborn inflation are also factors. 

As a result, traders and investors are liquidating their positions, and that is spilling over to the commodity sector. It is part of the reason the grains rallied Friday and the livestock, metals and other softs melted down. 

So how much of a correction does Gulke expect in the Dow Jones Industrial Average? He says there is likely more to come as nervous investors take profits and either head to the sidelines or look for other bargains or safe havens in the market. 

“Any time you have a move higher 50% of the time, you’re going to get a 50% correction, 60% of the time you’re going to get a 38% correction and a third of the time you’re going to get a two-thirds correction,” he says.

With money coming out of the stock market, will it look for a new home? Could it move into the grain markets and produce a rally and fund short covering? Gulke says it might be too early to tell. 

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