Economy The weakening of the yen

[日本語 Class]

A further slide would increase pressure on neighboring Asian economies such as China and South Korea, which are losing out in export competitiveness.

Realistically speaking, could it happen？ It would be very good in the middle of so much struggle. Meanwhile it seems that China is messing itself with its zero covid policies, making many foreign companies to consider readjusting their logistic and factories etc. It would be interesting all these changes in tech dynamic that contrasts that of 30 years ago!

 

[HanSolo]

Also, there does not seem to be much they can do.

I think this will be a common story worldwide soon.

What the BOJ could do is stop printing money (fixing bond yields), which would stop the loose BOJ / tighter Fed & others dynamic that's pushing the yen down, and thereby stop the pressure on consumer prices that's basically driving them towards poverty.

On the other hand, if they decided to actually tighten, it'd risk a recession -- also good at making people poor.

So they're pretty stuck, and its stagflation time for us. Which really sucks -- very hard to position yourself to defend against stagflation. For income: weak labor market, rising costs. For assets: recession risks a crash so usually want to be in bonds, but bonds are worthless under inflation. Buy gold or other commodities? Still plunges if a crash happens. Stay in cash? Getting eaten by inflation.

I saw on the news though that Michael Burry is investing in "defensive" stocks, e.g. Google, which are less affected by recessions, and therefore a middle ground between crash risk and inflation risk.

Income is a bit harder -- need to work out a side gig where demand increases during recessions.

 

[thomas]

Here's a summary of what the weak yen means for Japan and what caused it initially, aimed at non-economists (such as I).

Source: Why Japan's Yen Is the Weakest in 20 Years and What That Means


Meanwhile, the media continue to make a bogeyman out of poor Mr Kuroda.

The price increases are troubling, but it can't be helped. I'm cutting back on eating out," said Seiko Fukuchi, an 82-year-old housewife shopping at a Super Sanyo supermarket in Tokyo's Adachi Ward on June 10. About Kuroda's comments, she told the Mainichi Shimbun, "He and those around him may be leading good lives, but there are people having trouble making a living because of the coronavirus. I want him to think before he speaks." One 74-year-old pensioner said she was "really angry" at the central bank governor's statement. "I thought, 'Try living on the same salary as the average person for a month.'" About the recent price hikes, she said, "My generation experienced the oil shock. It was fine back then because our wages also went up. But I'm frightened now because I've seen this kind of inflation. I can't go out and do anything for fun (that costs money)."

Anger simmers over Bank of Japan governor's 'out of touch' comments as prices soar - The Mainichi

TOKYO -- The Japanese yen dipped to the low 135-range against the U.S. dollar on June 13, the weakest it's been since 1998. The yen's historic drop ha

mainichi.jp

However, he seems unfazed.

The Bank of Japan will not be bullied

 

[Grandpa Frank]

 

[thomas]

Ouch! The JPY saw a new record low today: 138 139 JPY to the USD. How much lower can it go? Our US hosting is getting prohibitively expensive.

The yen fell to a fresh 24-year low in the 138 level versus the U.S. dollar in Tokyo on Thursday amid growing prospects of aggressive rate hikes by the Federal Reserve, with the weak Japanese currency also helping stocks end higher.

Yen falls to fresh 24-year low against dollar

The yen fell to a fresh 24-year low in the 139 level against the U.S. dollar in Tokyo on Thursday amid growing prospects of aggressive rate hikes by the Federal Reserve, with the weakening Japanese currency helping stocks to end higher. The 225-issue Nikkei Stock Average ended up 164.62 points,…

japantoday.com

BREAKING NEWS: Yen dips below 139 vs. dollar to new 24-year low

BREAKING NEWS: Yen dips below 139 vs. dollar to new 24-year low

english.kyodonews.net

 

[Grandpa Frank]

How I felt in Fukuoka in 1971 when one US dollar bought 360Y. Hard to believe it was that low.

 

[Petaris]

View attachment 88430 How I felt in Fukuoka in 1971 when one US dollar bought 360Y. Hard to believe it was that low.

Did you hear that the guy who wrote/composed the theme song for the Bond movies died just recently?

Monty Norman, the composer of the James Bond theme, dies at 94

To produce the iconic theme song, the late composer drew on a piece he had written for a proposed musical adaptation of V.S. Naipaul's "A House for Mr. Biswas."

www.npr.org

 

[Grandpa Frank]

Facebook had a lot of posts about his death and examples of his work. Besides the great music , there were pretty nice Bond girls over the years.

 

[johnnyG]

The other side of the coin, the other way to see it, is as a strong dollar.

Also, tho about half as much as the yen, the euro (now at parity) and pound have also shifted. CNY and AUD have weakened least of all (against USD).

 

[日本語 Class]

The other side of the coin, the other way to see it, is as a strong dollar.

Also, tho about half as much as the yen, the euro (now at parity) and pound have also shifted. CNY and AUD have weakened least of all (against USD).

I was going to speak about Euro too, most of the major currencies are getting weaker against dollar. Very hard, I suppose it is because most of developed countries are resisting to raise interest rates

 

[johnnyG]

And hey, at least japan is not on this list (yet):

The big default? The dozen countries in the danger zone

Traditional debt crisis signs of crashing currencies, 1,000 basis point bond spreads and burned FX reserves point to a record number of developing nations now in trouble. Using 1,000 basis point bond spreads as a pain threshold, analysts calculate $400 billion of debt is in play. Argentina has...

finance.yahoo.com

 

[thomas]

And another record: on 1 Sept., the JPY fell to its lowest level since August 1998: 140 JPY for 1 USD.

The sell-off of the yen continued as investors expect the interest rate gap between Japan and the U.S. to expand as the Bank of Japan is firmly committed to continuing its ultraloose monetary policy, while many investors are speculating that the U.S. Federal Reserve will go on aggressively raising policy rates. The Japanese currency has fallen by 25 yen against the dollar since the beginning of this year.

Japanese yen falls to 140 per dollar for 1st time since 1998

Prospect of further U.S. interest rate hikes drive sell-off

asia.nikkei.com

 

[thomas]

Today, Chief Cabinet Secretary Hirokazu Matsuno signalled for the first time that the Japanese government might intervene if the yen continues its rapid depreciation: it would take the necessary action as rapid and one-sided moves drove the currency to a fresh 24-year low against the USD. The latest verbal warnings failed to stop the yen's further fall past 144 versus the USD on Wednesday. It had traded in the 140 zones earlier this week.

Japan warns of possible intervention to address "one-sided" yen moves

Japan on Sept. 7 signaled it may intervene if the yen continues its rapid depreciation, warning it will take necessary action as "rapid and one-sided" moves drove the currency to a fresh 24-year low against the U.S. dollar.

english.kyodonews.net

 

[thomas]

Today saw 145 JPY for one USD after the Federal Reserve raised its benchmark policy rate by 0.75 percentage points and the Bank of Japan maintained its ultraloose monetary policy.

US dollar hits 24-year high above 145-yen line - The Mainichi

TOKYO (Kyodo) -- The U.S. dollar rose above the 145 yen line in Tokyo trading Thursday, hitting a 24-year high after the Federal Reserve raised its be

mainichi.jp

Interesting Nikkei article (you may hit a paywall, though):

How overvalued is the dollar and how undervalued is the yen? The answer to both questions is the same: very. The dollar-yen exchange rate was around 140 in 1990, as it is now, but a 2022 dollar is nothing like a 1990 dollar. U.S. consumer prices have trebled in the intervening period while Japanese consumer prices have risen just 10%. The bogus exchange rate also makes comparisons between Japanese salaries and US/European salaries pointless. For the first decade of this century, average wages in Japan and the U.S. were roughly the same. Today, the average annual salary in the U.S. is $74,100. At current exchange rates, the average Japanese paycheck has fallen to $29,900.

The yen is bound to turn the tables on the dollar

U.S. competitiveness worries will bring currency imbalances into focus

asia.nikkei.com

 

[Grandpa Frank]

The way our government here in the US is spending and printing money , I fear we might go the way of Venezuela. It used to be they often talked about the amount of gold in Fort Knox to back up paper money , but I have not heard anything about it for many years now. We have pretty bad inflation now and there's a lot of hints about a bad recession coming. With an election coming in November here , hard to tell what's the truth and what's political propaganda.

 

[Petaris]

Today saw 145 JPY for one USD after the Federal Reserve raised its benchmark policy rate by 0.75 percentage points and the Bank of Japan maintained its ultraloose monetary policy.

US dollar hits 24-year high above 145-yen line - The Mainichi

TOKYO (Kyodo) -- The U.S. dollar rose above the 145 yen line in Tokyo trading Thursday, hitting a 24-year high after the Federal Reserve raised its be

mainichi.jp

Interesting Nikkei article (you may hit a paywall, though):

The yen is bound to turn the tables on the dollar

U.S. competitiveness worries will bring currency imbalances into focus

asia.nikkei.com

Hrm, maybe another trip back to Japan for New Years wouldn't be so bad.....

I have my eye on a Canon EF 70-200mm f/2.8L IS III USM and that exchange rate would probably make a big difference.

 

[mdchachi]

The way our government here in the US is spending and printing money , I fear we might go the way of Venezuela. It used to be they often talked about the amount of gold in Fort Knox to back up paper money , but I have not heard anything about it for many years now. We have pretty bad inflation now and there's a lot of hints about a bad recession coming. With an election coming in November here , hard to tell what's the truth and what's political propaganda.

The U.S. was taken completely off the gold standard in 1976.

 

[Ben W Bell]

Hrm, maybe another trip back to Japan for New Years wouldn't be so bad.....

I have my eye on a Canon EF 70-200mm f/2.8L IS III USM and that exchange rate would probably make a big difference.

Well given that camera equipment in Japan is usually pretty expensive, looking at Yodobashi Camera's price for that lens right now compared to BH Photo's pricing, they're currently the same within a couple of dollars, 297,000 yen vs $2,099 UDS. So even the weak yen doesn't seem to cancel out the higher Japanese price.

 

[Petaris]

Well given that camera equipment in Japan is usually pretty expensive, looking at Yodobashi Camera's price for that lens right now compared to BH Photo's pricing, they're currently the same within a couple of dollars, 297,000 yen vs $2,099 UDS. So even the weak yen doesn't seem to cancel out the higher Japanese price.

That is partially true, but don't forget that I can avoid paying tax as a tourist. Not sure about Yodobashi, but at BIC Camera I know I can.

 

[thomas]

Yesterday, at last, the BOJ intervened by selling US dollars to leave its benchmark rates in negative territory on a day when other central banks increased borrowing costs to cool inflation. The intervention resulted in the yen being traded for 141.2 against the USD.

Japan has intervened to prop up the yen for the first time since 1998 after it hit a 24-year low as its central bank resisted the trend for higher interest rates. Tokyo was forced to take action in the foreign exchange market to shore up its weakening currency after the Bank of Japan (BoJ) maintained its ultra-loose monetary policy on Thursday. [...] The intervention, which lifted the yen by 2% against the dollar back to 141.2, showed that Tokyo had lost patience with the currency's steady slide and highlighted the impact that the surging US dollar is having on significant economies.

Japan forced to prop up yen after bank keeps to negative interest rates

Central banks are putting rates up as currencies slide against dollar but Japan and Turkey buck trend

www.theguardian.com

Government officials are "prepared to take action 24 hours a day, 365 days a year," Masato Kanda, a vice finance minister, told reporters after the announcement. In an earlier era, a weak yen was widely seen as a boon for Japan's export-driven economy, making its products cheaper and more attractive for consumers abroad and driving up the value of its foreign earnings. [...] Japan previously intervened to strengthen the yen during the Asian financial crisis in 1998 when the currency was trading at around 146 to the dollar.

And while Japan had long been striving for inflation, it's not the kind the country needed.

While inflation in Japan has gone up during the pandemic, it remains well below the levels in other countries — 2.8 percent in August. And officials at the Bank of Japan believe that it is the wrong kind of inflation, created by pandemic-related supply constraints instead of the consumer-driven demand that low interest rates were intended to stoke.

Japan Intervenes to Prop Up the Sliding Yen (Published 2022)

The currency’s decline to a point not seen in 24 years prompted the rare action as officials keep interest rates low.

www.nytimes.com

I remember I visited Japan for the first time in 1998 when the USD was at 146 JPY. Contrary to expectations, I found the country to be quite affordable.

 

[mdchachi]

Yesterday, at last, the BOJ intervened by selling US dollars to leave its benchmark rates in negative territory on a day when other central banks increased borrowing costs to cool inflation. The intervention resulted in the yen being traded for 141.2 against the USD.

Japan forced to prop up yen after bank keeps to negative interest rates

Central banks are putting rates up as currencies slide against dollar but Japan and Turkey buck trend

www.theguardian.com

And while Japan had long been striving for inflation, it's not the kind the country needed.

Japan Intervenes to Prop Up the Sliding Yen (Published 2022)

The currency’s decline to a point not seen in 24 years prompted the rare action as officials keep interest rates low.

www.nytimes.com

View attachment 89802

I remember I visited Japan for the first time in 1998 when the USD was at 146 JPY. Contrary to expectations, I found the country to be quite affordable.

I was living there from 1994 to 2000. so I guess I experienced a historical period from en-daka to en-yasu. At the time I didn't think too much about it. I was getting paid in yen.

 

[thomas]

Yesterday, the JPY sank past the 150 mark.

The yen's rapid slide against the U.S. dollar threatens to squeeze the Japanese economy further, driving up the cost of imported food and energy while raising the risk of labour and capital fleeing for more lucrative destinations. The currency sank past 150 to the dollar to a new 32-year low on Thursday without a specific catalyst. The sell-off was driven by demand for dollars among importers and speculators exploiting the widening Japan-U.S. interest rate gap.

The main issues, according to Nikkei:

• Higher prices for food and energy (Japan relies on exports for roughly 60% and 90% of its supply)
• The Japan International Cooperation Agency estimates that another 5 million workers will be needed between now and 2040 to meet the government's growth goals; Japan's current economy will make Japan less attractive to migrant workers from countries such as Vietnam.
• Capital flight: Tohru Sasaki of JPMorgan Chase in Tokyo estimates that prices in the U.S. and Japan would be even at 80 yen to the dollar. With no bottom in sight, the yen's fall far beyond that point is leading retail investors to put more money in other currencies or foreign stocks, raising concerns that Japan's 100 trillion yen in deposits could start leaving the country.

Also, and no surprise here, foreign travel is out of reach for many Japanese residents. According to JTB Tourism Research & Consulting, local travel costs in the U.S. - including food and accommodations but not plane tickets - were up about 40% in July compared with 2019.

Paywall alert

Yen's fall to 32-year nadir risks capital and talent flight from Japan

Exports fail to take off despite weak currency as offshore production rises

asia.nikkei.com

There's good news, too: Japan aims to earn 5 trillion JPY (USD 4 billion) or more from tourists over the next financial year.

With weak yen, Japan aims to earn $34 billion from tourists next fiscal year

 

[musicisgood]

I think it will hit 180 . It didn't take long from 122 to 150 .

 

[musicisgood]

Your cheap rice cracker products are going to see a heavy increase soon.

 

[thomas]

Yesterday, Friday, Japanese authorities intervened again in the currency market to stem the yen's slide against the U.S. dollar, causing the JPY to jump to 146.23 against the USD.

Japan intervenes again to support yen against U.S. dollar, sources say

The yen reversed an earlier drop and jumped to as much as u00a5146.23 per dollar, with sources saying the Japanese government intervened to bolster the yen.

www.japantimes.co.jp

Meanwhile, Japan's inflation hits 3% for the first time since 1991.

Japan's inflation hit 3% for the first time in over three decades in September — excluding a tax hike-induced rise in 2014 — an acceleration that adds to doubts over the need for continued central bank stimulus. The year-on-year rise in September's consumer prices excluding fresh food matched analysts' forecast. The inflation reading was the highest since 1991 outside a jump in 2014 when prices were impacted by an increase in the sales tax.

Japan inflation hits 3% for first time since 1991 excluding tax impacts

Despite the extended stretch of price gains beyond its 2% goal, the Bank of Japan is expected to stick with its ultraloose policy.

www.japantimes.co.jp