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Japan warns of excessive currency moves; says all options on table

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All bark and no bite. BOJ printing yen and MOF buying yen is insanity. Pumping the brakes and gas at the same time will eventually break your car.

12 ( +15 / -3 )

The dollar fell into the 146 yen zone on Suzuki's remarks before moving back into the 147 yen range.

From March to October 2022, the yen weakened from 115 to 145 (yen-dollar exchange rate), and the rate has remained in the 145 range ever since.

PM Kishida has repeatedly emphasized “maximizing the benefits of the weak yen by promoting inbound tourism.”

However, we were also told by people like Toru Suehiro, a senior economist at Daiwa Securities, that “If the Japanese economy can draw strength from inbound tourism, it would also help ease some yen-selling pressure” — meaning we’d see the yen strengthen a bit. But we haven’t seen this latter part.

11 ( +11 / -0 )

In short, Japan is admitting to currency manipulation.

9 ( +13 / -4 )

Did they try this before, and it worked but went right back to where it was?

8 ( +8 / -0 )

False economy. The currency is where it is because of the lousy yields investors are getting for their cash here. Do something about the interest rates first.

6 ( +8 / -2 )

The only way that the yen will strengthen again is if the US economy enters another recession. In the meantime living in Japan will continue to become more and more expensive as food, gas, and consumer staples rise in price.

6 ( +9 / -3 )

There’s a dude on this forum who was forever attributing Japan’s economic woes to the Plaza Accord that put an end to Japan’s gaming the system through an artificially low exchange rate. The weak yen he spruiked as a panacea to restore Japan’s animal spirits has been achieved, but his recommendation that Japan depreciate its way to economic health is one nobody, outside of the MoF, sincerely believes.

5 ( +5 / -0 )

The option of raising interest rates by a significant amount is clearly not "on the table". Its the interest rate differential causing the weakness.

Give the amount of construction going on everywhere and difficulty in finding tradespeople, new cars on waiting lists etc., it might actually be possible to raise interest rates for the first time in a while. There seems to be a lot of demand out there at the moment.

5 ( +5 / -0 )

factcheckerToday  07:07 pm JST

False economy. The currency is where it is because of the lousy yields investors are getting for their cash here. Do something about the interest rates first.

Indeed with inflation at 3.5 % and 0 % on cash it is a rip off and probably bad for the economy as whole. With this inflation people feel poorer and poorer and as a result save even more so less spending.

The BOJ just have to let the 10 years government bond yield move to 1% . It will be much more effective than currency intervention to strengthen the JPY durably.

But they always find excuse not to change. In February it was problem with US banks , no it is the slowdown in China!

4 ( +5 / -1 )

I will hold on to my dollars rather than my yen… yen is to be held for a short period of time to buy bread and similar, but since the central planners here decided that destroying it to spare the govt debt situation, there is no reason to buy yen except for short term speculation.

This is the economic fundamentals Japan’s central planners have created.

If the MOF decides to buy yen for dollars, I will sell what yen I can for those dollars. Thanks in advance.

4 ( +6 / -2 )

In short, Japan is admitting to currency manipulation.

There’s apparently serious manipulation, and other countries are likely part of it. Just look at the data. The yen falls a nice even 30 yen over a nice even six months, and then comes to a screeching halt at 145. Currencies don’t naturally move like that.

3 ( +7 / -4 )

it might actually be possible to raise interest rates for the first time in a while. There seems to be a lot of demand out there at the moment.

Demand will likely be crushed if homeowners take a hit on their mortgages.

2 ( +2 / -0 )

 but since the central planners here decided that destroying (the yen) to spare the govt debt situation...

Um, hope. The BOJ "central planners" are staying the course with their monetary policy. It was the US and other of Japan's peers that suddenly and sharply hiked their interest rates to deal with their more serious inflation problems. That large interest-rate differential is the prime cause of the current currency rates. National debt isn't an issue. Otherwise, why would Japan be ramping up its military spending?

 it might actually be possible to raise interest rates for the first time in a while

Not likely, given the BOJ is predicting CPI to return below 2% next year.

1 ( +2 / -1 )

Well, what exactly can they do anyway? Does “intervention” mean buying up yen with dollars? How long would that work?

1 ( +1 / -0 )

@cuteusagi : You won't see 160 anytime soon. Certainly not in the next month.

1 ( +1 / -0 )

Japan needs to hike interest rates.

1 ( +1 / -0 )

Just pushing residents to save rather than spend. I guess if they want to rely purely on tourism that’s a plan but not a very good one

1 ( +1 / -0 )

Well if you have dollars, now is the time to buy in Japan.

0 ( +4 / -4 )

JeffLeeToday  06:24 am JST

 but since the central planners here decided that destroying (the yen) to spare the govt debt situation...

That large interest-rate differential is the prime cause of the current currency rates. National debt isn't an issue.

it is not an issue until it becomes one. The experience of other countries with quasi modern monetary policy did not end up nicely as reflected by their need to hike very aggressively after.

National debt has a limit this is inflation. It is not because Japan did not have it until recently that it will not have forever. Things are never forever.

0 ( +1 / -1 )

It seems controlled for now. But is this like a cork bottle waiting to pop? Or, are there factors to prevent that from happening over time.

0 ( +0 / -0 )

Give me 160. I halted buying until it reaches that in a month

-1 ( +3 / -4 )

Rakuraku

it is not an issue until it becomes one

I've been hearing that in relation to Japan for the past 20 years! (except from the MMT crowd). The last time was early this year, when the BOJ slightly loosening its grip on long term bonds prompted the FT and many others to state the move portended an unraveling of Japan's monetary stance and thus the end of the rate differential. Yawn.

-1 ( +0 / -1 )

150 is the proper value.

-2 ( +4 / -6 )

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