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The man behind Japan’s $170bn bid to prop up the yen

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The man behind Japan's $170bn bid to prop up the yen

For several years, Masato Kanda hardly slept.

“Three hours a night is an exaggeration,” he laughs as he speaks to the BBC from Tokyo.

“I slept for three hours consecutively before being woken up but I then went back to bed, so if you add them up, I got a bit more.”

So why was this 59 year-old bureaucrat’s schedule so punishing?

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Until the end of July, he was Japan’s vice finance minister for international affairs, the country’s top currency diplomat, or yen czar.

Key to the role was fending off currency market speculators that could trigger turmoil in one of the world’s largest economies.

Historically, authorities intervened to weaken the value of the Japanese currency. A weak yen is good for exporters like Toyota and Sony as it makes goods cheaper for overseas buyers.

But when the yen plummeted during Mr Kanda’s time in office it increased the cost of importing essential items like food and fuel, causing a cost of living crisis in a country more used to seeing prices fall rather than rise.

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In his three years in the role, the value of the yen against the US dollar weakened by more than 45%.

To control the yen’s slide, Mr Kanda unleashed an estimated 25 trillion yen ($173bn) to support the currency, marking Japan’s first such intervention in almost a quarter of a century.

“The Bank of Japan and the Ministry of Finance are very clear. They intervene not at a particular level of the currency, but they intervene when market volatility is too much,” says economist Jesper Koll.

Japan now finds itself on the US Treasury’s watchlist of potential currency manipulators.

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But Mr Kanda argues that what he did was not market manipulation.

“Markets should move based on fundamentals but occasionally they fluctuate excessively because of speculation, and they don’t reflect fundamentals which don’t change overnight,” he says.

“When it affects ordinary consumers who have to buy food or fuel, that is when we intervened.”

While countries like the US and UK can raise interest rates to boost the value of their currencies, Japan had for years been unable to put up the cost of borrowing due to the weakness of its economy.

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Professor Seijiro Takeshita of the University of Shizuoka says Japan had no other option other than to intervene in the currency markets.

“It is not the right thing to do, but in my opinion it is the only thing they can do.”

The irony is that the yen’s value jumped in recent months without Mr Kanda or his successor lifting a finger after the Bank of Japan surprised the markets with a rate hike, and the country got a new prime minister.

So was the $170bn bid to prop up the yen a waste of money?

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No, says Mr Kanda and points out that his interventions actually made a profit although he emphasises that it was never a goal.

On whether or not his actions were ultimately successful he says: “It is not up to me to evaluate, but many say our exchange management stopped the excessive level of speculation.”

Markets or historians should be the final judges, he adds.

After decades of economic stagnation, Mr Kanda also sounds an optimistic note about Japan’s prospects.

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“We are finally seeing investments and wages rising, and we have a chance to go back to a normal market economy,” he says.

A more surprising legacy for this “humble public servant” is him becoming a star on the internet after Japanese social media users celebrated his ability to surprise financial markets with a series of AI generated dancing videos.

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Housing shortage forcing dairy farmers off the land

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Banker all-nighters create productivity paradox

Madeleine Speed’s report “Worker shortages pose risk to food supply, warns Arla” (September 24) highlights how dairy farmers are quitting the industry. Herdspeople need to live near their work, but rural homes are invariably occupied by retirees or become holiday homes. Affordable rural homes can be built on so-called “rural exception sites”, but local authorities often require housing needs surveys to prove a need. These surveys cost a lot of money and only go to families who already have a home! Local authorities refuse to recognise numbers on their housing waiting list as proving need.

Only three parishes in the whole of East Devon have had such a survey in the past two years, so it is not a surprise that affordable rural homes are not being built. There are over 5,000 families in East Devon who are desperate for a home, but our council refuses to recognise them as being in need. The problem is the Nimbys.

Robert Persey
Honiton, Devon, UK

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Uber to launch limited-edition safari experiences in South Africa

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Uber to launch limited-edition safari experiences in South Africa

Uber is launching a limited-time safari experience in Cape Town, South Africa, available from 4 October, 2024, to 25 January, 2025, as the latest experience in their ‘Go Anywhere’ series of travel products

Continue reading Uber to launch limited-edition safari experiences in South Africa at Business Traveller.

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Parental rights ought to be motherhood and apple pie

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You wrote about Kemi Badenoch’s controversial comments on maternity pay at the Conservative party conference (Report, October 1), yet over the past two weeks a broader and ongoing clash of opinions over parental rights has been unfolding.

Deloitte made a clear statement by equalising parental leave, Campaign group The Dad Shift called for longer paternity leave and Badenoch argued statutory maternity pay is “excessive”. What’s clear is the lack of consensus on how best to support working parents.

But this isn’t about pitting genders against each other over caregiving roles or trading the “motherhood penalty” — the term used to describe the disadvantages that working mothers face in the workplace compared to childless women or men — for a broader “parenthood penalty”.

The choice hinges on organisations offering extended or equalised parental leave to encourage fathers to share responsibilities — critical to reducing the motherhood penalty, which accounts for 80 per cent of the gender pay gap. A cultural shift is needed where senior leaders model and endorse active parenthood to create an environment where both men and women feel confident using parental support without fear of damaging their careers or reputations.

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Emma Spitz
Chief Client Officer and Parental Transition Coach, The Executive Coaching Consultancy, London EC3, UK

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Business

Story that speaks to lack of co-ordination at the UN

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Andrew Jack’s article on the Model UN for schools (“Students learn from Model UN to handle disagreements diplomatically”, Outlook, September 26) says Model United Nations was created at Georgetown University in 1963.

As the organiser of the Model UN General Assembly held at Cambridge university in 1964, that claim comes as a surprise, as when contacted back in 1963, we were told by the UN that we were the first to host such an event. Such is British-American rivalry!

The Cambridge version was funded by a £20,000 donation from Roy Thomson, owner of the Sunday Times, and this paid for student delegations to come for a week from further and higher education institutions across the UK. The 7,000-strong membership of the Cambridge University United Nations Association (CUUNA) was an example of the international idealism that then permeated the university.

Attending this year’s UN General Assembly and the Summit of the Future event and recalling the frequent cynicism about the ability of the UN to resolve major issues in today’s world, I am pleased to see the Model UNGA format continues, albeit now more at high school than university.

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Anthony Colman
Chair, CUUNA 1963-64, Aylmerton, Norfolk UK

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Sri Lankans have some reasons to be cheerful

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I read with interest your observations on Sri Lanka’s election of President Anura Kumara Dissanayake (“Sri Lanka’s Lenin-loving new president riles old guard”, Report, September 28; and “Sri Lanka bets on a leftist outsider”, FT View, September 27).

I agree that there is concern about the remains of Dissanayake’s old People’s Liberation Front (JVP) and its role in insurrections in 1971 and 1987-89, but the general election on November 14 is unlikely to give the party a two-thirds majority in parliament, and the president is keen to reduce his own executive powers. He has clearly renounced any return to the use of force.

Yet I felt the article was less than generous in its critique when previous elected governments have been mired by corruption and incompetence, with Gotabaya Rajapaksa, the 2019 election winner, needing to flee the country to escape the consequences of misrule — the fall in the value of the Sri Lanka rupee from SLRs250 to SLRs420 to the pound sterling being just one example.

In last month’s vote, the old guard was well defeated at the ballot box and indications so far are more optimistic than you portray. The stock market has moved sharply upwards, the IMF seems to have had satisfactory preliminary talks and the impression that he is anti-Indian does not correspond with his public statements. Indeed the island itself seems to have confidence in the new dawn, although of course it’s very early days.

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David Panter
Blandford Forum, Dorset, UK

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Bank transfers could be delayed for four days to investigate fraud

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Bank transfers could be delayed for four days to investigate fraud

Banks will have the power to pause payments for up to four days to give them more time to investigate fraud, the government has said.

Currently, transfers must be processed or declined by the end of the next business day, but the new law will allow an extension of three more days.

For years, banks have needed to have reasonable grounds to suspect fraud before being able to investigate – but have also faced pressure from customers who want payments to be made instantly.

The long-proposed new regulations will come into force at the end of October – later than originally planned.

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Fraud is the most common offence in the country, accounting for a third of all crime in England and Wales.

Criminals have stolen billions of pounds through romance scams or by impersonating a genuine trader to trick victims into transferring money.

“We need to protect these people better, which is why we are giving banks more time to investigate suspicious payments and break the criminal spell that scammers weave,” said Tulip Siddiq, the economic secretary to the Treasury.

Banks have lobbied for permission to take longer to agree to payments, to allow them to investigate suspicious transfers.

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The new law will give them time to look at unusual spending patterns, contact a customer, and investigate further before the money is transferred.

The previous government’s draft legislation had proposed giving banks the new powers by 7 October, but now they will take effect from the end of the month.

UK Finance, the banking trade body, has welcomed the new rules. Consumer groups say the powers should be used in a careful and targeted way.

The changes could lead to some frustration among account holders who have become accustomed to bank transfers made online or via a mobile app going through almost instantly.

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Banks will need to inform customers when a payment is being delayed, explain what the customer needs to do in order to unblock the payment, and pay compensation if the delay lands the customer with extra charges.

The rules will come into force a few weeks after the introduction of a stricter mandatory scheme that will see fraud victims receiving up to £85,000 in refunds from banks within five days of an authorised push payment scam.

The maximum compensation has been reduced from a previous proposal of £415,000.

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