Another example of the ignorance of the financial media

The following story appeared on Bloomberg.com and highlights how clueless the media is:

BOJ Helpless as Yen Rises on Carry, UBS, Barclays Say

"Once the market realizes that we're now in a global recession, there's further deleveraging to come," said Geoff Kendrick, a senior currency strategist in London at UBS

That's a fallacy. While a central bank may be helpless at times in being able to support its currency, it can sell limitless quantities of its own currency if it wants. Any entity standing in the way of a central bank wanting to destroy its currency will be decimated.

At the present time, the Bank of Japan is allowing the yen to appreciate in an orderly fashion. Japanese policymakers probably do not like this and the BOJ can put an end to it any time if it wants, but probably risk incurring the wrath of Hank Paulson and the Bush Administration, who view a weak dollar as a good thing.