business

BOJ's commitment to easy policy keeps yen on relentless slide

14 Comments
By Noriyuki Suzuki

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14 Comments
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Japan doesn't have a plan.

-1 ( +1 / -2 )

Balance in currency demand has skewered

Sounds like a barbeque out there...

1 ( +1 / -0 )

Remembering the 360 yen to a dollar era, the dollar falling to under 200 yen to a dollar, the dollar falling below 125 to a dollar, then down to about 80 yen to a dollar for a short time, it is interesting to see the yen fall back to around 130 to a dollar. More than worrying about what the exchange rate is, it is helpful to see a stable exchange rate so that industry and individuals can plan. I think it is time to buy more akiya and property in rural Japan now that the rate is so favorable to me.

2 ( +2 / -0 )

The good old days are over.

-1 ( +2 / -3 )

Inflation is still considerably lower in Japan than elsewhere,

Some countries experience inflation, some have their currencies plunge at a rate higher than inflation in other countries.

There is no consequence free action, everything is a trade-off.

But Kuroda cannot engineer steady inflation of 2%.

giving Kuroda more leeway with his rate policy

He doesn’t seem to have many options at all.

0 ( +2 / -2 )

A weak yen policy is so outdated it is hardly laughable anymore. The elderly remember fondly a time when a weak yen meant great profits.

Of course this was before cheaper competitors came along, before export industries moved factories overseas and before a lot of people who are struggling to get by were even adults with jobs.

The Nikkei already stated that a weak yen has diminishing returns compared to 2010 or something like that, almost half the return it used to have.

Time to change the record Kuroda. Japan’s economy will only grow if there are higher salaries, some sense that there is a future beyond the immediate present and more investment in R&D. Instead the government just pursued a weaker yen and companies hoard cash.

4 ( +4 / -0 )

We should trade in Yuan. It is the only stable currency.

-4 ( +1 / -5 )

Such wild downslide of Yen can only mean one thing:

The national economy has been heavily battered, relegating from stagflation to regression. The eventuality would be most worrisome.

Yet, the nation has been advised to pour in more money in beefing up its virtual naval defense..

0 ( +2 / -2 )

Such wild downslide of Yen can only mean one thing:

The national economy has been heavily battered, relegating from stagflation to regression. The eventuality would be most worrisome.

Yet, the nation has been advised to pour in more money in beefing up its virtual naval defense..

2 ( +4 / -2 )

Cheap yen is catnip to Japanese capitalists and their LDP cronies.

0 ( +3 / -3 )

Inflation is all over, except the yen is in free fall against other major currencies.

I’d be worried if my income was in yen but it is not.

Still, being in Japan, I find the living has become easier…

-2 ( +5 / -7 )

Government spending records are broken every year,

this has nothing to do with govt spending. It's about the Bank of Japan's monetary policy. Econ 101.

his is not a situation now where the BOJ can just “tighten” or “raise rates”.

Yes it is. The sliding yen is due to the Boj's willful decision to continue to keep rates low while others raise. Inflation is still considerably lower in Japan than elsewhere, giving Kuroda more leeway with his rate policy. He reckons Japan's current inflation is temporary anyway, given that it is cost push.

0 ( +4 / -4 )

One of the risks of endless government bond buying by the BOJ has become bleedingly apparent now to most everyone.

Yes the BOJ could print as much yen as it pleased to prevent government borrowing costs from increasing and the government from bankruptcy, but not without consequences.

This is not a situation now where the BOJ can just “tighten” or “raise rates”. A huge hole has been dug.

It is more probable that the central planners will sit tight and pray for foreign circumstances to start to play more in Japan’s favour, but hope is not a strategy. The voters here may be a little more upset by the time the summer elections come around, but it’s still only the upper house.

Not great…

5 ( +8 / -3 )

Government spending records are broken every year, while the population falls and the tax base decreases.

To claim that the Fed is normalizing policy after adding some 40% to America’s money supply over the last two years is hilarious. “Normal” policy in an environment when inflation is over 8% would mean interest rates should be around 10%.

But massive deficit spending, astronomical public debt, and “competition” from the loss-generating public sector strangling output from the private sector means economies cannot generate enough value to fund themselves. So the debt hole continues to be dug deeper.

Out of curiosity, I had to buy a Zimbabwe $100 Trillion bank note. These are now worth more than $200 USD. Many of these notes have been bought by business schools and economics teachers to show that a government can’t simply create more currency to pay its bills. Perhaps I should give mine to Kuroda.

5 ( +10 / -5 )

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