Japan's Ruling Party: Let's Go Back to ¥120/$1

A few days ago, I discussed how Swiss currency intervention has transpired instead of Japanese currency intervention despite the yen's unusual strength. Displaying uncommon restraint, our Japanese friends have not bothered to appreciably intervene in spot currency markets since 2004. I have cousins younger than the last instance of Japanese intervention! Whether Japan has not intervened due to (1) being disabused that currency intervention doesn't work or (2) US pressure is certainly up for debate.

No matter; we now receive news care of the ever-reliable Reuters that the Democratic Party of Japan believes that a more realistic exchange rate is 120 yen to the dollar. And how exactly are they going to achieve that, I ask?

A group of Japanese ruling party lawmakers called on the government to try to keep the yen around 120 per dollar to help beat deflation, a draft proposal showed on Tuesday, pushing the U.S. currency sharply higher. The dollar jumped as high as around 93.25 yen, according to Reuters data, erasing most of the day's losses after trading near 92.70 yen before the details of the draft were announced.

The draft proposal, compiled by a study group of more than 100 Democratic Party of Japan (DPJ) lawmakers, also called on the government and the Bank of Japan to set an annual consumer inflation target of over 2 percent. "Utmost efforts should be made to maintain an appropriate exchange-rate level of around 120 yen per dollar, taking into account purchasing power parity," the draft proposal said.

The draft proposal was made by the group of mostly of junior-ranking DPJ lawmakers, which was launched last month to mull measures to beat deflation. The panel will submit the proposals to party executives for possible inclusion in the DPJ's campaign platform for upper house elections expected in July.

The reference on currency levels may be changed or removed in the final proposal, however, as there was some opposition within the panel about setting a specific exchange-rate target, said DPJ lawmaker Takeshi Miyazaki, who attended the meeting. The draft proposal did not elaborate on what specifically the government or the BOJ should do to achieve what it sees as "appropriate" currency levels [read: massive currency intervention].

Well, get to it lads. I've been waiting for it in my pumpkin patch for a very long time. China can certainly use some company in Uncle Sam's doghouse [woof-woof].