business

China turmoil needn't rattle BOJ, yen rise not a worry: Abe adviser

17 Comments
By Kaori Kaneko and Sumio Ito

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© (c) Copyright Thomson Reuters 2015.

©2022 GPlusMedia Inc.

17 Comments
Login to comment

@Supey11, my guess is that you're neither Canadian nor Japanese, because you don't get the message.

That's a result of the Canadian dollar weakening against the American dollar. The Yen-USD rate has remained fairly stable for almost a year now: http://www.xe.com/currencycharts/?from=USD&to=JPY&view=1Y

4 ( +4 / -0 )

@TrevorPeace

if the exchange rate stays as it is now, I won't be back for several years

Umm, do you even know the current rate? If you've been coming for the past 10 years, you'd know that the current rate (119 - 120 per dollar) is about the same as it was a couple months ago, and still a whopping 50% lower than it was from 2010 - 2013 (80 per dollar). Its the same thing with the Euro (which actually has barely moved in the past week of "turmoil")

If you are coming from another country (non USD or Euro based), then your exchange rate woes probably aren't due to the yen, but rather the situation with that currency.

3 ( +4 / -1 )

@TrevorPeace

Contrary to what you've said about rates in the 2010-2013 period... I can unequivocally state your opinion is wrong

Sir, please refer to the chart link provided by @Strangerland (not my "opinion"), and input the timeline parameter on the side of the chart for either 5 years or 10 years (5Y or 10Y). You will clearly notice the pumped up Yen value during those years. You can then see the same type of pattern during that same time period with the Euro as well as the Canadian Dollar if you change the currency parameter above the chart.

Furthermore, as I also stated above, (as it seems you missed it): "If you are coming from another country (non USD or Euro based), then your exchange rate woes probably aren't due to the yen, but rather the situation with that currency". The Canadian dollar fell from about 100/yen to 93/yen (7% drop) in the previous 2 months before the market turmoil this article speaks of (that is, between the end of June and last Friday, during which time the USD and Euro were relatively stable, even with the whole Greece debacle). As of now, the CAD/yen rate is just 3 % off last Friday (again, the time period this article speaks of). But if you'd like to cancel a future trip because of this sudden 3% decline, that's up to you.

Additionally, with these charts (not my "unequivocally wrong opinion") you can also note that the Canadian dollar bounced even more drastically from 106/yen to 92/yen in the 6 weeks between mid-December to end-January, while during the same period the USD/yen rate was fairly stable. So from this (as @Strangerland concurs) it can be seen that its the Canadian dollar which has the volatility issues, probably since its so strongly linked to oil and precious metal prices (all of which have tanked in the past several months). Yes, I do "READ THE NEWS", but excuse me for not being so overtly concerned with the dramatic swings of the somewhat insignificant Canadian Dollar.

And BTW, just because you visit so often and have family on either side of the Pacific doesn't make you an authority any more than myself (regardless of the nearly 2 decades I've continuously lived and worked in Japan in finance). Let's just let the facts within the economic charts speak for themselves.

2 ( +2 / -0 )

Supey agree - Trevor is talking crazy talk. yen is pretty low compared to last 5 years or so.

2 ( +2 / -0 )

If the Yen stays high, how likely is it that the savings from the lower cost of imported foods and other products will be passed on to consumers? Not holding my breath.

1 ( +2 / -1 )

The sales tax should be raised as scheduled. But we should be very careful it would not hurt the welfare of Japan’s lower-income people,” Hamada said.

Hope some Japanese politicians are smart enough to interpret his critical message.

Tax hike has to be done very carefully and slowly without rocking the boat.

Unlike US, Japan is Imposing tax on food and medicine that is a big NO, NO.

10% tax hike on 1,000 yen grocery bill is a lot of money for the poor while 10% tax hike on expensive dinner bill 50,000 yen is nothing for the riches.

Economics 101 teaches this basic concept how a pie needs to be divided fairly. Anyone in Economics? Agree?

1 ( +1 / -0 )

Central banks normally don't react to stock prices. But in Japan's case, the yen is a safe haven currency, so it has certain considerations to make.

0 ( +1 / -1 )

"As the article in this case correctly noted, the yen is "perceived to be safer", by some people"

Define "some people." (which are your words, not the article's)

0 ( +1 / -1 )

Why is spending down in Japan is precisely because of the unfair tax system here! Food,books,clothes,newspapers are all taxed at 8% - the Japanese cannot afford to have kids due to the myopic LDP.....

0 ( +0 / -0 )

If the Yen stays high

To put it in some perspective, versus the US dollar the yen is sitting around 5% off the lowest levels that it's been at in more than a decade. 120 in today's terms is low, not high.

how likely is it that the savings from the lower cost of imported foods and other products will be passed on to consumers? Not holding my breath.

Do you have specific culprits in mind?

Do those businesses have pricing power? If not, they will have been sucking up the impact of higher import prices themselves. (Much as been made of this negative consequence of Abenomics.)

Do those businesses hedge themselves against changes in prices of their inputs in the first place?

People often complain about the full effect of decreasing oil prices is not reflected in gasoline prices, blaming gas stations. Yet the government has a fixed levy on gasoline which doesn't decrease when raw input costs decrease.

Such complaints against business are frequently misinformed. Money doesn't grow on businesses.

in Japan's case, the yen is a safe haven currency, so it has certain considerations to make.

As the article in this case correctly noted, the yen is "perceived to be safer", by some people. A currency sitting 5% off multi-year lows is not, in reality, a safe haven. That it is at 120 today and not bang on the lows is a short-term gyration, that as Hamada notes, should be looked through by those other than short-term speculators.

-1 ( +1 / -2 )

Trevor , You're embarrassing yourself, the Loonie without the current financial crisis has always been volatile on exterior markets , for a brief moment last week the Euro was a safe haven. We've all been given the heads up to look over the next two months.

“If the yen becomes stronger than the current level for another one month or two months, then the BOJ may (will) take monetary actions,”

plus we are not going to get the Hike in interest expected from the USA

-1 ( +0 / -1 )

Releasing cash in corporations through taxing, capital spending, dividend or whatever, is more effective to stimulate the economy and collect tax revenue than raising consumption tax flat, which is obviously regressive. Making interest undeductible may be a good start in Japan as interest rate is almost zero anyway and property market needs to be tamed.

-1 ( +0 / -1 )

“The sales tax should be raised as scheduled. But we should be very careful it would not hurt the welfare of Japan’s lower-income people,” Hamada said.

Raise the minimum wage.

He said there should be some tax-code changes or structural tax changes to help low-income citizens cope with a higher sales tax. Not enough. People's wages have to rise so they feel more secure. Japan's minimum wage is abismal compared to other nations.

-1 ( +0 / -1 )

The rise of the yen definitely is a worry! I spend a lot of money in Japan, traveling around the country for 3-6 months every year for the past ten, and if the exchange rate stays as it is now, I won't be back for several years. Stick that in your international tourism hat, Mr. Abe!

-3 ( +1 / -4 )

Some people = some short-term speculators.

Short-term speculators don't care about a 30% decline in value over a couple of years. The yen is "safer" than the Zimbabwean dollar or Venezuelan bolivar, I grant you, but a haven it is not.

Maybe you are a short-term speculator in your heart of hearts.

-3 ( +0 / -3 )

globalwatcher,

Hamada makes two points, one is that the tax hike is necessary, the other that measures ought to be taken to mitigate the impact to lower-income people.

Giving the rich and middle class tax breaks in the name of helping the poor ignores the first point. Dividing the pie "fairly" is fine and good, but the government doesn't have almost half the pie it is trying to divide up each year. So it needs to come up with more pie, or cut each slice down somewhat.

The purpose of the taxation system is to collect revenue efficiently without distorting economic behavior and hindering economic growth. A simple, flat consumption tax does this well. Creating different tax rates for different consumer items doesn't do the job as well, and critically, also would give the tax breaks to rich and middle class people who can afford to pay their full share. Those tax revenues could be redistributed to the lower income folks to help them out, but only if it is collected from the rich and middle class in the first place.

-5 ( +0 / -5 )

@Supey11, my guess is that you're neither Canadian nor Japanese, because you don't get the message. I have a Japanese family in Sendai. They., on the other hand, have a Canadian family in Victoria, BC, and we're all concerned for one another when it comes to exchange rates. DUH, I'm aware of the exchange rate every day. Don't jump to concussions - the current rate has changed drastically over the past few weeks. READ THE NEWS, or better yet, get a grip on your banker's take on things! Contrary to what you've said about rates in the 2010-2013 period, I was in Japan every one of those years, including three months during and after the 2011 tsunami, and I can unequivocally state your opinion is wrong. As in 'been there, done that.'

-7 ( +0 / -7 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites