Since the Russia Ukraine war started, the
Japanese Yen has dropped 10%, outpacing even the Russian ruble, the Turkish
lira, and the Argentinian peso. The reason why the war is the major culprit
behind the fall of the Japanese Yen had been explained here.
Besides the war, the currency rout is being
fueled by the Bank of Japan's (BOJ) success in capping 10-year Japanese yields
at 0.25%. BOJ has committed to keeping its 10 years bond yield at 0.25% at all
forces, including printing an unlimited amount of money just to support the
bond price.
What are the implications?
A weak Yen is good for Japanese exporters, which
means it could be a threat to companies producing the stuff where Japanese are
good at making, such as automotive, auto parts, chemicals, and machinery.
In order to compete with Japan, most of the Asia
countries that rely on international trade could also devalue their currency in
order to maintain their export competitiveness. When foreign investors are
expecting a downtrend in the Asian countries' currency, their money will leave
this region, the situation is worsening as the US is raising its interest rate.
In short, watch the USD/JPY rate closely. Once
it reaches 135, something bad could happen.
Some Observation on JPY
21 Apr, 2022
Category: Currency
Tags: JPY
The Japanese Yen is plunging even faster than Turkey's Lira and Argentina's Peso.
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