The yen continued its slump against the dollar, pushing the currency towards its lowest level in 34 years and significantly raising the risk of market intervention by Japanese authorities.
During trading on Wednesday morning, the yen dropped to a low of ¥151.93 against the dollar as investors defied two days of intensifying warnings from officials.
Finance minister Shunichi Suzuki stepped up verbal warnings, saying the government “would not rule out any steps against any excessive moves” in the yen.
Forex analysts believe that the Japanese authorities have pencilled in a level of ¥152 per dollar as the “line in the sand” that would trigger a direct intervention.
As someone getting their salary in Yen, ouch.
As long you live and pay in Yen it's fine, but colleagues planning to go back in a couple of years, this is a serious drop in effective salary.
My condolences. It's crazy how much the dollar will take you in Japan. I'm getting meals at Co Co Ichibanya that would run me $30 in Koreantown LA for $6 here.
Definitely - just did this. Last trip was in 2019, when I got 110 Yen for my GBP. This trip, all the Yen denominated prices were essentially the same, but I got 180 Yen/GBP - so everything was nearly 50% cheaper, resulting in a much more luxurious (and enjoyable) trip
I guess there needs to be a balance between low value for driving exports and high value for making imports possible. Japan is an island nation, they need to import a lot of things to make their exports happen.
The national bank increased the interest rate in order to increase the value of the yen and now it is the lowest in several decades. How do you conclude that it is a "needed balance"?
Their interest rate used to be <0%. To a first approximation that is worthless, there is almost no reason to buy Japanese government bonds. One Wiki page talking about 2013 [0] suggests that 70% of the bonds are purchased by the government itself and the remainder is mainly Japanese institutions that I would expect are legally compelled to (otherwise, why bother?).
I doubt the official Japanese interest rates are directly connected to the markets in a way that makes sense using traditional thinking. Most rational actors wouldn't be involved in a market where there is lots of downside and no real compensation. So the people involved aren't likely free to make rational decisions and all bets are off about what they do.
I just got 5.27% annualized on a 4 week US tbill while the Japanese 2 year is all the way up to 0.18% today.
Taking short term rates from negative to zero is just going to slow the bleeding a little. With these rate differentials this should be expected but it also might be a good place to long yen here but I am not a currency trader.
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[ 3.0 ms ] story [ 50.8 ms ] threadDuring trading on Wednesday morning, the yen dropped to a low of ¥151.93 against the dollar as investors defied two days of intensifying warnings from officials.
Finance minister Shunichi Suzuki stepped up verbal warnings, saying the government “would not rule out any steps against any excessive moves” in the yen.
Forex analysts believe that the Japanese authorities have pencilled in a level of ¥152 per dollar as the “line in the sand” that would trigger a direct intervention.
The national bank increased the interest rate in order to increase the value of the yen and now it is the lowest in several decades. How do you conclude that it is a "needed balance"?
I doubt the official Japanese interest rates are directly connected to the markets in a way that makes sense using traditional thinking. Most rational actors wouldn't be involved in a market where there is lots of downside and no real compensation. So the people involved aren't likely free to make rational decisions and all bets are off about what they do.
[0] https://en.wikipedia.org/wiki/National_debt_of_Japan
Taking short term rates from negative to zero is just going to slow the bleeding a little. With these rate differentials this should be expected but it also might be a good place to long yen here but I am not a currency trader.