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| Japan shares up as G20 statement stokes weak yen hopes | Japan shares up as G20 statement stokes weak yen hopes |
| (35 minutes later) | |
| Japanese shares have risen after finance ministers of the G20 group of nations avoided singling out Japan for criticism over the recent yen weakness. | Japanese shares have risen after finance ministers of the G20 group of nations avoided singling out Japan for criticism over the recent yen weakness. |
| The yen has dipped nearly 15% against the US dollar since November amid Japan's efforts to stoke inflation. | The yen has dipped nearly 15% against the US dollar since November amid Japan's efforts to stoke inflation. |
| There were concerns that a criticism from G20 may prompt Japan to alter its aggressive stance. The fears were that it would result in the yen rising again and hurt Japan's plans to spur growth. | |
| Japan's Nikkei 225 index rose 2.2%. | Japan's Nikkei 225 index rose 2.2%. |
| Meanwhile, the Japanese currency continued to weaken. It fell 0.6% to 94.12 yen against the US dollar. | Meanwhile, the Japanese currency continued to weaken. It fell 0.6% to 94.12 yen against the US dollar. |
| It also dipped 0.5% to 125.50 yen against the euro in early Asian trade. | It also dipped 0.5% to 125.50 yen against the euro in early Asian trade. |
| Further weakness? | Further weakness? |
| Analysts say the G20 communique at the end of its meeting in Moscow on Saturday was an endorsement for Japan's recent monetary moves. | Analysts say the G20 communique at the end of its meeting in Moscow on Saturday was an endorsement for Japan's recent monetary moves. |
| The policies have seen Japan's central bank, the Bank of Japan, double its inflation target to 2% in attempt to spur domestic consumption. | The policies have seen Japan's central bank, the Bank of Japan, double its inflation target to 2% in attempt to spur domestic consumption. |
| The central bank has also expanded a key stimulus measure aimed at keeping long term interest rates low. | The central bank has also expanded a key stimulus measure aimed at keeping long term interest rates low. |
| Analysts say that as Japan continues to pursue these policies, the yen is likely to weaken further. | Analysts say that as Japan continues to pursue these policies, the yen is likely to weaken further. |
| "With Japan, as yet, using various measures to ease monetary conditions domestically, we do not expect a large international backlash against its efforts and look for the Japanese yen to continue to decline gradually as the easier monetary conditions feed through," Barclays Capital said in a note. | "With Japan, as yet, using various measures to ease monetary conditions domestically, we do not expect a large international backlash against its efforts and look for the Japanese yen to continue to decline gradually as the easier monetary conditions feed through," Barclays Capital said in a note. |
| A weak yen bodes well for the Japanese exporters and its economy on various fronts. | A weak yen bodes well for the Japanese exporters and its economy on various fronts. |
| To begin with, it makes their goods more affordable to foreign buyers. It also helps boost the exporters' profits when they repatriate their foreign earnings back home. | To begin with, it makes their goods more affordable to foreign buyers. It also helps boost the exporters' profits when they repatriate their foreign earnings back home. |
| And as firms see their profits rise, they are likely to have a bigger cash pile to invest towards research and development or expansion of their facilities. | And as firms see their profits rise, they are likely to have a bigger cash pile to invest towards research and development or expansion of their facilities. |
| Investment in research helps the firms become more competitive as they develop new products. Meanwhile, increased capital investment helps boost Japan's overall economic growth. | Investment in research helps the firms become more competitive as they develop new products. Meanwhile, increased capital investment helps boost Japan's overall economic growth. |