Strong yen spurs int'l travel, currency trading

Serrano - they're not just buying and selling -- they are setting the price. Their "job" is to create a market.

If you had JPY and wanted to buy USD, and there was no one to sell USD to you (e.g. buy your JPY), how well do you reckon the world economy would function?

@Serrano: How do you think the world functions? But thanks, its good to know that my job is 'useless' .

Kronos,

Those foreign currency deposits are up as compared to June, it says.

I am not sure that it is wise to be buying EUR or USD with both Eurozone and USA in tatters.

Yeah, I think people look at the rates and think "dollars are so cheap" and they assume that it'll rebound (as it often does during range bound periods), without asking why so much selling pressure has been piled on to put the price where it is now. Eventually it will get some respite, but I can't see any reason for respite right now, eh.

This article also fails to point out that all importers of foreign goods are making a huge fortune on this exchange rate.

You'd be stupid not to trade now.

Or poor :(

When you consider that the dollar was buying more than 250 yen 30 years ago, I'm not sure why people are thinking that buying them now and putting them in a foreign currency deposit makes sense.

I'm holding on to my yen until the Japanese debt crisis really gets started.

By holding yen, you're saying that the yen is going to get even stronger? Does that seem possible considering the BOJ intervention?

Just remember to anticipate when the yen is going to weaken and make your move (short the yen) before the yen goes back to the 90s and 100s. Frankly, now's as good a time as any to start shorting the yen (if you are a long-term investor). Buy YCS, the yen ultrashort ETF. For every 1% decline in the yen, you get 2% back.

Foreign currency deposits have exploded. According to a Shinsei Bank report, compared to June, U.S. dollar account balances have increased fivefold

As compared to when? Before the BOJ made the indication they would intervene?

I am not sure that it is wise to be buying EUR or USD with both Eurozone and USA in tatters. JPY is just going to get stronger.

@david: Thanks David. I guess I should learn to read lol!

@ka-chan: I believe it is widely considered that Japan's debt is mostly domestic i.e. the government owns it to the Japanese people not foreigners. So if they want to pay it, they have certain tools at their disposal, like raising taxes (the current debate we see in the Diet). The perception is Japan's debt is managable...for now...This is mostly not the case for other countries like US.

I,m off to guam for 2 weeks can,t wait..

Consumers end up being screwed. My air fare for my summer vacation. is nearly double than usual. So I'm being forced to spend more money overall, while the corporations reap the benefits. The fuel surcharge is a big chunk, and whenever fuel prices increase, Exxon and others reap record-high profits. That's a fact, not my opinion.

Serrano,

If trading foreign currency and making profits to compensate one for taking the inherent risks involved is "useless" then I wonder how you get by whenever you travel (or do business) internationally.

Foreign currency deposits have exploded. According to a Shinsei Bank report, compared to June, U.S. dollar account balances have increased fivefold.

When you consider that the dollar was buying more than 250 yen 30 years ago, I'm not sure why people are thinking that buying them now and putting them in a foreign currency deposit makes sense.

I'm holding on to my yen until the Japanese debt crisis really gets started.

I bought about $100,000 and will wait till the turn around and buy yen back!

You'd be stupid not to trade now.

Hey great time to go to your local Ford dealer! Usd way down! Jp yen way up! No brainer??

octopussy

By holding yen, you're saying that the yen is going to get even stronger? Does that seem possible considering the BOJ intervention?

Sure. Japanese authorities have been intervening for decades, but USD/JPY has still come from 250 to 78. Last year they intervened around 84 or something like that, and USD/JPY bounced to 87 or 88, then earlier this year we hit 76.25 post earthquake. More intervention, back up to 85 very briefly, then back down again. Yesterday the intervention was apparently twice the size of last year's but it only took us as far as 80. I wouldn't take on the BOJ on an intraday basis but long term the BOJ can't fight this trend - the dollar is going down the gurgler at the moment, and talk is that the Bernank is going to print even more dollars. Given the plunge on Wall Street last night, had the BOJ not intervened yesterday I'm sure USD/JPY would already be at record lows today. But Japan does have issues staring it in the face, the markets just have worse immediate problems right now.

Just remember to anticipate when the yen is going to weaken and make your move (short the yen) before the yen goes back to the 90s and 100s.

Once it regains it's foothold in the 80s I'll be thinking about it then for sure :) But I'd not be surprised if we see the 60s first. Only economic recovery in the US can spare it, IMO.

the yen is about to tank - lower vs USD I think it will be near parity again this time next year based on fundamentals - International Governments and indeed Japan itself cannot tolerate an overvalued jpy as is the current case

@Serrano, when you change money to go abroad who do you think's on the other side? And when the BOJ decide to sell JPY, who's buying on the other side?

I don't get it. Japan is the worlds biggest debtor nation in terms of GDP (225%) and that is before the tsunami. Based on that, shouldn't the yen be 350 to the dollar as it was in the 1970's? In a major downturn where exports will crash along with GDP, how can Japan service it's debt?

@Kronos raising the taxes to pay money they owe the people? Why not just cut taxes and default on it, seems to me the same thing.

Default is the last option. Once you default, borrowing again becomes very very difficult.

@Serrano: Yes - this is an actual occupation. Do you find something wrong with that?

@minello7:Why shouldn't importers take advantage of the exchange rate? Business is business - would you work for free?

Unfortunately such speculation may reek profits for the rich, it is the poor who ultimately suffer from currency trading. Just look at the sub prime recession a couple of years ago or NGO reports on the up to 30% rise in food prices in Africa. Currency and comodity speculation. Having said that, I did just enjoy a fantastically cheap holiday in Vietnam...

Asagao,

I can't agree that currency speculation is the domain of "the rich", and I don't see how a university student or housewife trading dollar-yen or euro-sterling leads to people in Africa suffering... (I know one currency trader who made a million yen from currency volatility in the wake of the earthquake and related disasters, and he donated the lot of it.)

When the price of a commodity rises there's normally an underlying reason for it - if not price will correct. I think new demand for bio fuels from advanced economies was possibly the main contributor to the food shortages, more so than people stating how much they are prepared to pay for something. And when the price for a commodity goes up - producers will ultimately make more of it in response. We need prices and people stating what they are prepared to pay in order for the world to function at all. Otherwise I suspect starvation would be much much worse.

Well that was fun while it lasted. The DJA down 5% overnight, AUD/JPY right back where it was before yesterday's intervention, Nikkei tanking today and Europe still on the verge of sovereign crisis. It's a year later than I expected but GFC part II has just kicked in.

Weak dollar has been encouraging many Japanese tourists coming to US. According to the study, these tourists spend at least average $4000 while they are in US.

I'm holding on to my yen until the Japanese debt crisis really gets started.

davidattokyo, that's my long term plan. Dollar will continue to decline.

"currency traders"

Is this an actual occupation?

rainman - Yes, I find something wrong with people who make profits doing something as useless as buying and selling money.