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Post-G-7 yen gains halt dollar rally

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The April trade surplus was due in large part to weak imports

Translation: Japanese residents are so poor, they can't afford to buy anything. If they devalue the yen they will kill the already sluggish consumer spending. Its economic suicide.

6 ( +11 / -5 )

Sell em if you gottem.

1 ( +1 / -0 )

" .... expected ...."

This word alone says it all. "They" always expect and make promises .....

.... and then reality strikes.

2 ( +2 / -0 )

The above news is an example of how the currency trade market levels the playing field between countries. When outsourcing or moving manufacturing to low-labor cost countries (which is what Japan was until the 70's), the advantage of these low costs fades away as currency strengthens, and wages increase.

If everything is left alone, eventually wages become stable from country to country, and the flow of trade becomes stable as well. Unfortunately, these things are seldom left alone, as countries love to cheat to keep their advantages, by tariffs, restrictions, and currency manipulation.

But the market cannot be defied for long, if a country tries to cheat it's way to maintaining an economic advantage for too long, then that country eventually has the problems which Japan faces nowadays.

2 ( +3 / -1 )

Aly RustomMAY. 23, 2016 - 11:28AM JST

The April trade surplus was due in large part to weak imports

Translation: Japanese residents are so poor, they can't afford to buy anything

The drop in imports from the previous year is mainly due to falling crude oil prices.

2 ( +3 / -1 )

Emboldening dollar bulls,

Where can I get me some "dollar bulls"!! :D

0 ( +0 / -0 )

The foreign news read : Japanese exports decreased by 10% in April while imports decreased 23,3%. This, to show the completed picture.

6 ( +6 / -0 )

** If they devalue the yen they will kill the already sluggish consumer spending. Its economic suicide ** japan did just fine when the yen was at 250/$1. yes a strong yen will make all those foregin made items cheaper, but in return manufacturers will just move more Japanese production to cheaper overseas factories, meaning less (decent paying ) jobs , less tax revenues. Everytime you purchase that foreign made product your just supporting foreign jobs and the tax revenues of the countries involved. How is that helping the J economy!? It may feel like its better for the average Taro in the short term , but long term itll just bring everybody down as we have already seen in the last 25+ yrs.

-4 ( +1 / -5 )

Even the first of the three arrows isn't working any more.

3 ( +3 / -0 )

The drop in imports from the previous year is mainly due to falling crude oil prices.

I actually think that would increase imports. Falling oil prices means its cheaper to import goods into your country, which in turn would drop the price even lower. Anyway, there is no denying that the average Japanese household has seen its income drop since Abe took office. QE and a tax raise must have a great deal to do with household spending;

they kill it.

3 ( +3 / -0 )

@wtfJapan

Way too simplistic take on the currency issue

Of course Japan did well at Y250 / $1 rate 40 years ago. The Japanese manufactured within Japan and the world economy was a completely different picture than it is today where Japan has so many competitors for the mercantilist export economic model that it's trying to practice again

Even though I still buy products from Japanese companies, largely because of the limited choice available, very few of those products are manufactured in Japan.

Japan's problem is not it's balance of trade relative to the exchange rate of its currency. Japan still runs abnormally high current account surpluses and as Sangetsu pointed out, all being fair, the Japanese currency should rise until some balance in trade is reached.

Japan's problem is expenditure. It spends far more than what it pulls in as tax revenue. The stark choices facing the Japanese government are either it cuts back expenditure, changes the corporate tax to one based on taxes taken from transactions done, rather than profit earned, or it redistributes Japanese wealth away from corporate Japan to the general populace by legislating a more equitable society.

The only way that your's or Abe's pipe dream of Japan as once again a manufacturing hub of the world, is by a very weakened currency and a working population prepared to accept similar wage levels to those paid in Vietnam and China.

1 ( +4 / -3 )

Aly RustomMAY. 23, 2016 - 02:36PM JST

The drop in imports from the previous year is mainly due to falling crude oil prices.

I actually think that would increase imports. Falling oil prices means its cheaper to import goods into your country, which in turn would drop the price even lower.

You are free to bet on the foreign exchange market. But if you think Japanese imports will increase if crude oil price falls, you will most likely lose your bets.

-1 ( +2 / -3 )

CH3CHOMay. 23, 2016 - 01:45PM JST

The drop in imports from the previous year is mainly due to falling crude oil prices

CH3CHOMay. 23, 2016 - 03:23PM JST

You are free to bet on the foreign exchange market. But if you think Japanese imports will increase if crude oil price falls, you will most likely lose your bets.

You're wrong anyway. YoY import declines were -19.2% with Asia, -18.1% with USA and -16.8% with China.

None of these export oil to Japan.

The decline is classic Kuroda/Abenomics of stifling imports through currency manipulation to protect the domestic market... classic neo mercantilism.

Something Kuroda promoted 10 years ago at the Asian bank but had to quickly withdraw it because it caused such a furore.

I remember him saying it at the time, as a way of protecting Japanese domestic markets and I thought what an idiot.

1 ( +2 / -1 )

The decline is classic Kuroda/Abenomics of stifling imports through currency manipulation to protect the domestic market... classic neo mercantilism.

exactly.

0 ( +0 / -0 )

in return manufacturers will just move more Japanese production to cheaper overseas factories, meaning less (decent paying ) jobs , less tax revenues.

This is already happening, but for reasons opposite of what you have stated. By manipulating currency to keep local manufacturers running, especially in a country with no natural or agricultural resources, prices of all goods are increased. High prices mean less consumption, population decline, and the movement of industry to overseas factories, with less decent paying jobs, and less tax revenue.

A stronger yen would mean that imported goods (and most things in Japan are imported) should mean lower prices for consumers, who then have more money to spend on other things. Increased spending and consumption leads to more decent paying jobs, and more tax revenue.

But Japan's economy and government are controlled by a small group of industrial conglomerates and farmers who are more interested in the BOJ and LDP using our money, and the value of our money, to pad their profits.

1 ( +2 / -1 )

Nothin' to worry about. Abe, Aso and Kuroda are doing things their way. They could care less about what's happening to the struggling consumer. They gotta achieve that 2% inflation target ... or bust ... which is what they seem to be doing now ...

2 ( +3 / -1 )

looks like the US will do the job by itself, there's an expected US rate rise maybe even two before the end of the year, US is getting close to the 2% inflation ceiling this will see money flooding back into the US$,. Feds have been holding off to try and keep the currency low, (another form of manipulation.) If that fails Japan can always crank up the (made in the USA QE) wouldn't hold my breath if you're a high Yen lover.

-1 ( +0 / -1 )

A robust set of trade data from Japan had the yen back on the rise on Monday...

I'm curious what data they are talking about. Exports fell 10%, imports fell 23%, explaining the trade surplus. This was the sharpest drop in three years. The data was indeed robust, robustly bad.

One can't look at the current exchange rate data and easily compare it to the rates of the 70's, and 80's, because there are new currencies like the Euro, and Chinese Yuan, and other currencies which are no more, like the mark and the franc. If you formulate these currencies into the math, you end up with the relative rate. When the exchange rate last year was 120 yen to the dollar, that was actually the equivalent to the 200-plus yen to dollar rates of the early 80's.

Despite the yen weakening to such levels, there has not been a corresponding increase in exports or export-related profits. Exports and profits did increase, but much less than they should otherwise have. But once again, we have to take into account the burden of the state, which absorbs much more of what people and companies earn nowadays, leaving less to spend an invest. It is not the exchange rates, interest rates, or liquidity which is the issue, it is the non-productive public sector taking so much that there is too little left over to fuel private sector growth.

0 ( +1 / -1 )

I am betting on a strong dollar.

1 ( +1 / -0 )

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