Name that currency
As the UK remains mud-stuck, we look east to Japan and see a strikingly different situation
After an initial recovery, the Japanese government is now preparing itself for a "double-dip" recession. Currently in a state of deflation once again, the stage is now set for a collision between the Central Bank and the Finance Ministry. After exiting deflation only three years ago in 2006, the limbs of Japan's double-armed government will be driven yet further apart. The Bank of Japan opted to leave interest rates at 0.1 percent, adding that the economy was now "picking up". Further job losses look set to follow, alongside a massive psychological blow to a country that thought itself recovered.
And back here, the UK's concern-laden fiscal health has seen sterling fall to a one-week low against the dollar. Still being perceived as a 'risky' currency, investors are showing increasing caution towards the pound. Deterioration in UK public finances was almost twice as fast as expected in October, meaning that exit strategies will be postponed and borrowing will have to increase yet again. Sterling also fell 0.5 percent against the yen to 147.55 yen, where the euro rose 0.4 percent to 89.75 pence. The pressure is mounting on the government to define how it will escape a long-term fall-out from its extensive public borrowing, and there are worries that Britain's triple-A sovereign debt rating will be threatened unless action is taken.
US bank JPMorgan Chase & Co is buying the second half of Cazenove to add to the half it already owns in a deal valuing the 190-year-old stockbroker at £2bn. Dealmakers will receive windfalls, and JPMorgan Cazenove will continue to operate under that name merely becoming wholly-owned by JPMorgan's UK investment bank arm. "Large US banks like JPMorgan are looking for overseas growth opportunities and this is a relatively low-risk investment to make and the JV has worked well so far," said Richard Staite, US banks analyst at Atlantic Equities in London.
In other news...
•The Council of Mortgage Lenders' statistics showed that gross mortgage lending fell 27 percent year-on-year to £13.5bn in October in line with newly updated forecasts for 2009, predicting some seasonal slowdown between now and December. Remortgaging also dropped, alongside the incentive to refinance.
•Confusion over the restructuring of Opel continued, with talk of some 10,000 job losses as part of aims to reduce European capacity by around 20 percent.
•The Hershey Co and Italian confectioner Ferrero are in talks to bid on our very own Cadbury, competing with Kraft Food Inc. The news is causing quite some uproar in Hershey's base Pennsylvania, where the street lamps are shaped like Hershey's kisses...
