Analysts see more room for yen's fall as BOJ stands pat on policy

With the Bank of Japan standing firm on its ultraeasy policy to support the pandemic-hit economy

This ultraeasy policy and the resulting collapsing JPY will not help the economy. Facing higher and higher inflation people will reduce their consumption and consumption represents 56 % of the econmy. Policy makers probably think that it will be canceled out by tourist consumption. Even it it was the case , it shows the disdain policy makers have for their own people.

"The situation has become such that people only talk about the negative sides of the weakening yen," Daiwa's Ishizuki said.

What is the upside then?

150 was and still is the perfect number, has been in the past, we just need to adjust to it.

Prices are higher for imported products so Japan must increase local production especially food production to make them affordable. Car manufacturers and other exporters will benefit from a low yen. Japan could attract more tourists because of the low value of the yen. However, workers here that send money to their families overseas will not be very happy.

The government should capitalize on the positive aspects of the weak yen and provide incentives to Japanese firms for moving some of their offshore manufacturing bases back to Japan, experts said.

There aren’t enough native workers to do this, the work available is through black companies so how? Expert my ****. Government incentives are you joking, unless you have a connection to a 2nd or 3rd generation politician your business is not going to get anything. Marry in to one of these families and tax payers can make a huge profit for you.

150 was and still is the perfect number, has been in the past, we just need to adjust to it.

Even if it is, which which I doubt in an environment of very high energy prices, there is no way you can stop it at this level. The current economic policy will push it lower and lower to a very damaging level.

What used to be made in Japan is now being made overseas.

Automation is very advanced in Japanese factories so those jobs of the future won’t be for the young Japanese even if the yen keeps plummeting and factories relocate back to Japan

Prices are higher for imported products so Japan must increase local production 

Please let me know how do you increase local production of oil!

So basically Kuroda, head of the Bank of Japan is telling everybody that Japanese companies cannot exist unless he continues this ultra-easy monetary policy! If interest rates even raise a little the economy is doomed! What kind of a signal does this send to investors. If there are so many zombie companies in Japan that are being propped up by the gov't how do they ever plan on getting out of this mess. I fear things are really going to start to go downhill fast from now. Tax increases, social wlefare cuts, healthcare limitations, and many other things that people depend on, all the while prices will continue to rise for energy, food and other essentials.

While a weak yen hurts domestic consumers due to higher costs of imported products, including natural resources, it is a boon for some businesses that benefit from inbound travelers spending more.

Used to be that the "boon" was the Japanese export market. But with fewer and fewer manufacturers in Japan, it will have to start relying more on international tourism. Yet, it's a double edged sword, as while the foreign tourists will have more buying power, the businesses that support the tourism market will be forced to raise prices, do to increased costs domestically, from rental cars, hotels, tourist attractions, damn near everything.

It will also begin to curb the domestic market as well, and outbound travelers who are being forced to spend more as well.

It's not a pretty picture for the near future.

150 was and still is the perfect number, has been in the past, we just need to adjust to it.

Where is there any data to actually support your opinion?

Another downside of the weak yen is that it makes Japan less attractive to foreign workers that are so much needed. Including from countries like Vietnam. The yen has depreciated by 20% against the dong in two years. Very good article here in Nikkei Asia .

https://asia.nikkei.com/Spotlight/Datawatch/Foreign-workers-shun-Japan-as-yen-s-value-plunges

The US is raising interest rates simply because its economy is booming and prices are rising. No one in his right mind would think of raising interest rates in a deflationary economy like Japan.

Waiting for input from @fxguy who knows this business

Where is there any data to actually support your opinion?

There isn't any... It's nonsense

The US is raising interest rates simply because its economy is booming and prices are rising

I would dispute this narrative. Plenty of evidence to support it too. Energy and food prices are up because of the war. Massive impact on input costs.

The data the feds uses to justify its stance are employment and retail prices.

We all know retail prices are a result of supply chain cost increases. The retail sector is already in recession a year ago, having surplus inventory of $550 billions from last Christmas that it will have to clear this Christmas.

The participation rate drove the employment data, people giving up looking for work is not the same as people having jobs.

I suspect once the mid term election is over and there is no longer a need to defend the Biden administration, American voters are going to be in for a big surprise.

It's was all clear to me when the White House had to publish a piece defining what a recession is LOL. Fxguy will chime in I'm sure but all I can say is I'm glad Kuroda is still playing by the rules (along with all other central bankers, except the feds).

or you can go to your company's fxguy, most Japanese companies have one, and ask him/her, IMHO you will get the same narrative to support Kuroda.

The US is raising interest rates simply because its economy is booming and prices are rising. No one in his right mind would think of raising interest rates in a deflationary economy like Japan.

6 months ago quite so, but with the rise in the cost of living here, prices increasing nearly across the board, increases in fuel, energy, food and everything else, it's not longer a deflationary economy, and Japan is headed for a recession if things keep going the way they are.

Consumer spending is dropping, particularly because of the relative light speed jump in the yen rate, and people here are loathe to spend any money on large ticket items, due to economic uncertainty, no matter how much Kishida "urges" otherwise.

Wages decreasing in real value as well, is not a bright sign for the near future at a minimum.

The funny thing is that cheap Yen has been what Japan wants all along. Now they get it no one knows what to do. Boosting manufacturing and export ? Unlike before, today everyone from China to Vietnam is also making the same thing and one reason fuel prices go up is because they all also buy it for their own economies. Can Japan compete for resources, more importantly for brains ?

Japan should really explore being a Thailand. So what if the economy depends on tourism ? We all know the country is shrinking so instead of insisting on a revival better focus on soft-landing.

No matter how many times people say it, there is no positive side to a weak yen for people living in Japan.

Trickle down is a lie. Prices are going up. Salaries are not. All whilst the elderly population of Japan continues to increase, which will inevitably lead to more taxes to pay for them.

Someday soon young people in Japan will have had enough. The university students i used to teach worked part time to afford trips to foreign countries. Now they work part time jobs so they can eat meat.

Japan is now a cheep place to visit, if you reside in Thailand, Vietnam, was going to say China but those peoples are in lock down.

Waiting for input from @fxguy who knows this business

Fxguy will chime in I'm sure

Moi?

Lots of good comments from the JT crowd here. I’ve been saying it recently but the collective wisdom of JT commenters is clearly superior to the brains of the central planners of government and Kuroda at the BOJ.

The ministry of finance pulled another intervention on Friday night while their Japanese Mrs. Watanabe forex traders were asleep; will they dump another ton of dollars on the market Monday morning to try to make a point?

They are wasting their precious dollars, methinks.

Unless Kuroda resigns, is fired, or makes a big change in policy, or Kishida makes a big change in fiscal policy (ala UK Truss rolling back unfunded spending, but even bigger scale of change) my money (were I a betting person, that is) would be on the market taking the yen back down against the dollar again in a relatively short period of time to new lows. I would prefer to be wrong about this.

One other thing is over in the US the Fed wheeled out their WSJ mouthpiece Nick Timiraos to suggest that the FOMC might start to slow down their rate hikes soon.

Something like this might give all the yen shorts some reason to take some profits, sooner or later. Profit taking is the biggest possibility that could take the yen higher (in a more sustained fashion that MOF intervention) in my mind.

The US is raising interest rates simply because its economy is booming and prices are rising

Their central bank is hiking rates because inflation there is at like 8% and their long term interest rate is like 4.25% on the 10 year. They need to hike rates to bring their inflation under control. Their economy could be booming or in recession; the Fed’s explicit mandate is price stability (and maximum unemployment), not doing this or that when the economy is booming or not.

Used to be that the "boon" was the Japanese export market. But with fewer and fewer manufacturers in Japan, it will have to start relying more on international tourism. Yet, it's a double edged sword, as while the foreign tourists will have more buying power, the businesses that support the tourism market will be forced to raise prices, do to increased costs domestically, from rental cars, hotels, tourist attractions, damn near everything.

The more significant threats will be foreigners buying up everything to create their foreign settlements across Japan as in the Bakumatsu era.

This is already the case in the UK. Middle East/Muslim elites, American elites, and Asian elites carved up the countries into foreign cities for laundering dark money. British rents, real estate prices, and costs of everything go up sky high to make British citizens can't afford to live in their own country.

The more significant threats will be foreigners buying up everything to create their foreign settlements across Japan as in the Bakumatsu era.

This has been happening for at least a decade or more already. Chinese companies have been purchasing large tracts of private land, and they include the mineral rights, as these Chinese investors are looking to export the water that is available on the land.

will they dump another ton of dollars on the market Monday morning to try to make a point?

The answer, was yes :)

Next Year will be a terrible year for all, including those of us in Japan.