The end of this week has seen Japan announce a rescue package pf 1.5 trillion Yen (£11.4 billion) to help Asian Countries threw the economic slow down.

The Prime Minister of Japan Taro Aso has decided on this rescue package and will be spent on promoting trade within the region and on infrastructure over the next three years.

The Japanese Prime Minister has called upon other wealthy nations to help smaller countries in the same way and has warned against protectionism. We are already seeing signs of protectionism in the UK, with workforces showing their growing resentment or foreign workers.

Japan has been hit hard by the slowdown and only this week NEC has announced 20,000 job cuts over the next 14 months and Hitachi has announce 7,000 job losses due to a drop in sales and is predicting a 700 billion Yen (£5.3 billion) loss for the year.

In contrast to this bad news Subway announce that it intends to open 600 new stores across the UK creating around 7,000 new jobs. Also, good news for Amazon as they saw their profits increase by 9% for the final quarter to December 2008 making a final annual profit of $1 billion (£685 million), so there is good news around despite the gloom.

A tough time for the air industry yet again, after getting through the high oil prices over the last several months we have now seen a huge fall in freight traffic and even more that the drop after 9/11. Freight traffic has falling by 22.6% in December of 2008 over the same month last year. The International Air Transport Association (Iata) is warning of a tough time for both passenger and freight airlines alike.

With the G20 summit coming up in April in the UK the UK’s Prime Minister Gordon Brown has urged a global confidence, saying that world leaders must have the “confidence to act” to tackle the global recession. Mr Brown was speaking at the Economic Forum in Davos where there were many world business entrepreneurs speaking and included Sir Stelios Haji-Ioannou the founder of Easyjet, who was trying to talk up the opportunities that exist in a down-turn.

Turning to commodities, gold has seen a further rise this week ending the week at $929 having risen 3.7% over the end of last week. The price of gold will remain high and might go even higher with the prospect of a continuation of a weak US dollar. Oil is still flirting around the $40 mark having dropped back again this week ending at $41.75, representing a drop of over 10%.

The first oil company to show signs over the affect of falling oil prices is the worlds largest oil giant Exxon Mobil. The company has reported a big 33% fall in profits for the last quarter of 2008 over the same quarter for 2007, falling to $7.8 billion (£5.3 billion).

End of the week saw:
Stock exchanges:
FTSE 100: 4,150
DOW: 8,001
S&P: 825.88
Nikkei: 7,994

Currencies
UK Sterling £ to US Dollar $ 1.45905
UK Sterling £ to Euro € 1.13592
UK Sterling £ to Japanese Yen 131.282
UK Sterling £ to Aus $ 2.28796
US Dollar $ to Euro € 0.778240
US Dollar $ to Japanese Yen 89.9350

Commodities
Nymex Crude oil – $41.75
Gold – $929.00

The British pound is coming under pressure again on the currency markets as investors dump the pound in favour of currencies like the Euro and the US Dollar!

Sterling has dropped to the following rates:

One UK Pound will get you just $1.37 in the USA – this is great for the travelling American so they can come to visit our shops like we did when the rate hit over $2 to the Pound!

One UK Pound will get you €1.06 – which is not quite as low as it has been, but it is still very low and will likely give you a par exchange at the airports when you are travelling abroad.

One UK Pound will translate to Australian $2.10 – for those of you that are travelling further afield!

One UK pound gets Japnese Yen 121.77 – Which is not good for Japan exporting cars to the UK and this will put pressure on these car manfacturers!

From a business perspective this is good for companies that export to other countries and especially to the US and Europe, because our goods become so much cheap cheaper (up to 35% cheaper in the USA from the Sterling high last year) to those countries where we export.

However, where companies are heavily dependent upon imports, then where these come from within the Eurozone and from the USA, their costs will have risen sharply and of course could force them to either put up their prices or could force them out of business all together! Where prices are forced up, this could put pressure on inflation within the UK, which is the last thing we need right now!

The US car manufacturers are not the only companies struggling in the present economic crisis with Toyota bracing itself for its first lost in 71 years.

The Yen has been strengthening recently and with the world economic slow-down Toyota finds itself in an unusual position with demand for its cars falling, it is expected to report a loss of 150 billion Yen (£1.13 billion). To compare Toyota reported a profit of 2.27 trillion Yen (£17.13 billion), which puts things into perspective.

Of course the USA is one of Toyota’s key markets, so where the US economy is in crisis sales are being hit hard, as we see President Bush throwing cash of some $17.4 billion (£11.78 billion) at struggling carmakers General Motors and Chrysler in order to stave off bankruptcy as they too see demand at an all time low.

Global finance ministers have expressed concern at the “extreme volatility” of the yen, as the Japanese currency remained near 13-year highs on Monday.

The comments came from heads of the Group of Seven (G7) leading industrialised nations, but they stopped short of prescribing action.

The yen’s rise continued to hit Japanese stocks, with the Nikkei index closing at a 26-year low on Monday.

Japan’s government said it would now move to shore up the share market.

The yen hit a rate of 91.93 yen against the dollar on Monday. On Friday it had touched 90.90 yen against the dollar, its highest level since 1995.

Global co-operation

The G7 leaders commented on the high value of the yen in a joint statement issued after talks in Tokyo.

They said they would co-operate as appropriate to bring stability to battered global markets, but did not give any specific details of how they hoped to lower the yen’s value.

The yen’s rise has concerned Japanese investors, who are worried about its impact on the country’s main exporters, as it makes their products more expensive overseas.

As a result, Japan’s main stock index, the Nikkei, fell on Monday to close at its lowest level since 1982.

‘Tighter controls’

Prime Minister Taro Aso said Tokyo would move to introduce tighter controls on the short selling of stocks, and also pledged increased bail-outs for the country’s banks.

Short selling occurs when an investor borrows company stock owned by another investor, then sells the shares in the market, hoping the price will fall.

If the price does fall, they then buy the shares back at the lower price, pocketing the difference.

Other nations, such as the UK, have already moved to put a temporary ban on short selling in financial stocks.

Japan’s Finance Minister Shoichi Nakagawa added that he would “continue to watch currency markets with great interest”.

The rise in the value of the yen is being driven by two main factors.

Firstly, like the US dollar, it is seen as a haven buy in uncertain times.

Secondly, the yen has risen as a result of the end of the yen carry trade, in which traders used the yen to buy currencies with higher interest rates.

The yen carry trade has been unwinding due to the difference between Japanese rates and those elsewhere in the world narrowing.

This means that traders have pulled out of investments in countries such as Hungary and Iceland, buying back the yen in the process.

News reported by The BBC