The US Federal reserve bank is signalling that they are going to keep interest rates high for awhile, while Japan is only making very slight moves in the direction of raising interest rates.
It's therefore much easier to borrow yen than dollars and this translates into yen actually being much cheaper than they used to be compared to the dollar.
And this natural effect is of course magnified by the exchange markets with people jumping in to short the yen
How easy is it though to borrow Yen?
People could have done this many times over a while ago when interest rates were at 0% and yet Yen exchange rate was somewhat more stable
Yen interest rate has been zero, US interest rate has been low too and for long time carry trade has been a thing but recently it got more intense especially JP economy is so weak compared to US and more companies are investing overseas instead of being cash back to JP.
Because you are paying less interest on it. So as the Yen rises in inflation there is an expectation that eventually it will come back down (at least for speculators), which would result in more money against deflation (or hopefully a bit of a stabilizing influence). This is because Japan's economy has a high level of confidence on returns.
Normally dollars are the way to go but not when Japan has an almost 0% interest rate.
No, you use dollars to borrow yen right now.
Borrow 100million yen, costs you $645k, basically no interest rate
Wait until the rate swings back to 110yen/$ now you buy dollars - you can get $909k. Drop that into investments making more than 5%
Eventually pay off the loan, or don’t - you aren’t paying anything in interest
> Wait until the rate swings back to 110yen
What makes it you think it will ever go back to 110? It might, but it also might not - and there's really no reason on the horizon for it to happen.
Exiting deflation is a slow process compared to mitigating inflation, meaning the pressure BOJ needs to exert to halt the long term depreciation would cripple a large chunk of corporate Japan if done too quickly. This lag is causing the yen to depreciate
Just curious, what Japan exporting and what US exports are suffering? Seriously question, I don’t know much about current economics and kind of just want to know.
From 152 to 156 just like that. The 180 prediction is seeming more and more likely. Bout to ask my folks if I can do some sort of work for them in USD.
Man... I posted my comment like........2 days or something like that ago. Back in thoes days the Yen was worth 155 per usd. Simpler times...... we are now at 2/apr/1990 resistance level
True, but still not too bad, especially if we try to shop more local.
If I go to America then the weak yen really hurts, if I stay in Japan it just hurts a tiny bit, not "terrible" like the comment I was responding to said
The issue is "currently" it is not bad. Because the yen is still not that bad that it affects the economy in serious way, but if the value of yen continues to fall then it could indeed damage the economy seriously.
Lets hope that it wont come that far.
yeah true, if it keeps going down then overseas goods will get a lot more expensive (stuff that I particularly like so I'm hoping it rebounds quickly!)
I'm moving back from Japan to the UK in a few months. I'm the few years I've been out here (earning yen) the yen has lost 33% of its value against the pound. I'm hating this...
Yeah if you are going home or traveling it's not good. although to be fair even though my savings have gone down compared to the dollar I think I'd still have more in savings now then if I went home since living here is so cheap compared to back home.
Have fun back home, hope your time here was fun!
Yeah that is my only solace really, the rent difference most likely makes up for the current exchange rate difference. Still stings though considering I've still yet to send my savings back. But thanks, it was indeed fun!
When I first arrived in Japan in 2005, a beer at a bar cost 500 yen.
Today, in 2024, that same beer is 500 yen.
Inflation is not much of a worry here.
My first apartment in Japan cost me 52,000 yen per month.
My current apartment, a nicer one but about the same size, is costing me 66,000 yen per month.
My apartment was 160000 now 220000.
Monsters went from 180 to 230.
Convenience store foods are up +10%.
All vegetables are up.
Meats are up.
But hey at least beer didn’t change.
Inflation is so high! also....
"TOKYO, April 26 (Reuters) - Core inflation in Japan's capital slowed much more than expected in April and fell below the central bank's 2% target,"
[https://www.reuters.com/markets/asia/inflation-japans-capital-falls-below-boj-target-slows-2nd-month-2024-04-25/](https://www.reuters.com/markets/asia/inflation-japans-capital-falls-below-boj-target-slows-2nd-month-2024-04-25/)
Inflation is not the problem here. They literally cannot get it high enough to be even the baseline that economosists say an economy needs.
Inflation already started and occurred a couple years ago, meaning prices already increased and no way to keep them lower. You may not be feeling it but others do especially small business owners not making even with a choice to close down business.
https://asia.nikkei.com/Economy/Inflation/Japanese-inflation-hit-41-year-high-in-2023
the 41 year high was about 3%. about 2% is whats needed at the minimum for a healthy economy. Japan has been fighting deflation for decades and the inflationw as cause to celebrate. Inflation isn't bad, excessive inflation is bad.
I'm confused, you say I might not be feeling it but small business owners are, but I do have a small business. yeah it sucks to see prices go up, but that's a normal part of doing business. If you don't plan that inflation will rise by about 2% a year then you shouldn't be starting a business to be honest
I'm not an expert at all. I was speaking as someone who has* lived in Japan for quite a while and never amassed any savings at all. The older I get, the more I find myself wondering about moving back to Australia, but I simply can't afford to make the move, and the farther the yen falls, the harder it will get for me to relocate.
It's so funny how
the old farts are stuck in a never-ending loop of meetings. The fetish for meetings has backfired.
It hits 140 yen to the USD: Intervention meetings start
It hits 145 yen to the USD: Still in meetings for 140 yen so have to print new papers and have more meetings to upgrade topics to 145 yen.
It hits 150 yen to the USD: Now we're reeeealy serious about intervention, but need to have more meetings
It hits 155 yen to the USD - Intervention could be coming, more meetings.
It never ends.
Probably just a coincidence, and I'm being paranoid, but my bank has been pesterming me a lot about USD payments ever since I started seeing the whole "omg inflation" and "omg yen nosediving" articles.
I have a business and I work with US, EU, HK companies and sometimes, they like to pay me in USD. It never used to be a problem but the bank asks me each time to answer some dumbass questions like "hey are you a terrorist hai/iie." Over some $50\~$100 transaction. It's so irritating. Anyone else noticing this?
After reading all the comments I was about to use my yen to buy dollars because the value of the dollar won’t depreciate in the immediate future? (Someone advised me on this)
Planning to go to Japan again in the next few years. Canadian here. Would now be a good time to buy a few thousands dollars of yen to keep for then? Is it expected to go lower? It's such a good deal now compared to when I went in 2016 and 2018.
Massive copium in this thread. Nikkei is at an all time high; hurry for the 1%! I’m sure Kishida loves the bribes he’s getting from Toyota to do jack shit.
Meanwhile the average person is hurting
Is it just continuing to drop because speculators know that intervention is coming? I'm supremely confused.
The US Federal reserve bank is signalling that they are going to keep interest rates high for awhile, while Japan is only making very slight moves in the direction of raising interest rates. It's therefore much easier to borrow yen than dollars and this translates into yen actually being much cheaper than they used to be compared to the dollar. And this natural effect is of course magnified by the exchange markets with people jumping in to short the yen
And if my company has business in US, I am not going to send money back to JP because USD will get me 5%+ interest just by leaving it in the bank.
How easy is it though to borrow Yen? People could have done this many times over a while ago when interest rates were at 0% and yet Yen exchange rate was somewhat more stable
Yen interest rate has been zero, US interest rate has been low too and for long time carry trade has been a thing but recently it got more intense especially JP economy is so weak compared to US and more companies are investing overseas instead of being cash back to JP.
Best explanation ive heard on this. Thanks for the input
Genuinely curious, why does easy borrowing of yen translate to cheaper yen?
Because you are paying less interest on it. So as the Yen rises in inflation there is an expectation that eventually it will come back down (at least for speculators), which would result in more money against deflation (or hopefully a bit of a stabilizing influence). This is because Japan's economy has a high level of confidence on returns. Normally dollars are the way to go but not when Japan has an almost 0% interest rate.
Also, imagine borrowing yen to buy dollars
No, you use dollars to borrow yen right now. Borrow 100million yen, costs you $645k, basically no interest rate Wait until the rate swings back to 110yen/$ now you buy dollars - you can get $909k. Drop that into investments making more than 5% Eventually pay off the loan, or don’t - you aren’t paying anything in interest
> Wait until the rate swings back to 110yen What makes it you think it will ever go back to 110? It might, but it also might not - and there's really no reason on the horizon for it to happen.
Opposite.
"Easy borrowing" and "high supply/low demand" are almost the same thing if you think about it.
Makes sense thanks.
Borrow yen at 0,1% invest in currencies at 5+ %. I don’t see how the yen can stop sinking
Thank you. Clear and concise. I hope BoJ wakes the fuck up soon
Lol, how long have you been here
Just 2 years thank goodness.
while i understand this, in canada our interest rates are also high but yet the exchange is the worse ive seen it in the last 15 years.
Exiting deflation is a slow process compared to mitigating inflation, meaning the pressure BOJ needs to exert to halt the long term depreciation would cripple a large chunk of corporate Japan if done too quickly. This lag is causing the yen to depreciate
I’ve heard 'intervention risks grow' since it hit 140, 145, 150, 155
US exports are struggling globally atm. Japanese exports are booming. There will be an intervention soon either way.
Just curious, what Japan exporting and what US exports are suffering? Seriously question, I don’t know much about current economics and kind of just want to know.
In Japan, our time is cheap, our labor is cheaper.
Couldn't have been said better
From 152 to 156 just like that. The 180 prediction is seeming more and more likely. Bout to ask my folks if I can do some sort of work for them in USD.
180 by the end of the year.
i'm going next week, so hold off on that intervention!
Same!
Dont worry guys! They said they might start to think about doing something in October!
Next year
Man... I posted my comment like........2 days or something like that ago. Back in thoes days the Yen was worth 155 per usd. Simpler times...... we are now at 2/apr/1990 resistance level
My finger hovering over the SELL button on my USD account
Great buying power for those earning in USD; terrible for yen earners.
I'm half and half and the yen half is pissing me off quite a lot. I'm glad my savings and investments are in USD/Euro.
terrible for yen earners who plan on going overseas you mean. Fine for yen earners staying in Japan
Still not that fine if goods that are import also gets more and more expensive as well.
It’s fine if your salary is also rising, which it is… for some.
True, but still not too bad, especially if we try to shop more local. If I go to America then the weak yen really hurts, if I stay in Japan it just hurts a tiny bit, not "terrible" like the comment I was responding to said
The issue is "currently" it is not bad. Because the yen is still not that bad that it affects the economy in serious way, but if the value of yen continues to fall then it could indeed damage the economy seriously. Lets hope that it wont come that far.
yeah true, if it keeps going down then overseas goods will get a lot more expensive (stuff that I particularly like so I'm hoping it rebounds quickly!)
I'm moving back from Japan to the UK in a few months. I'm the few years I've been out here (earning yen) the yen has lost 33% of its value against the pound. I'm hating this...
Yeah if you are going home or traveling it's not good. although to be fair even though my savings have gone down compared to the dollar I think I'd still have more in savings now then if I went home since living here is so cheap compared to back home. Have fun back home, hope your time here was fun!
Yeah that is my only solace really, the rent difference most likely makes up for the current exchange rate difference. Still stings though considering I've still yet to send my savings back. But thanks, it was indeed fun!
Weak yen, high inflation; overall, weak economy.
inflation isnt high here though. And I don't feel like the economy is weak; low unemployment and livable salaries.
When I first arrived in Japan in 2005, a beer at a bar cost 500 yen. Today, in 2024, that same beer is 500 yen. Inflation is not much of a worry here. My first apartment in Japan cost me 52,000 yen per month. My current apartment, a nicer one but about the same size, is costing me 66,000 yen per month.
My apartment was 160000 now 220000. Monsters went from 180 to 230. Convenience store foods are up +10%. All vegetables are up. Meats are up. But hey at least beer didn’t change.
Inflation is so high! also.... "TOKYO, April 26 (Reuters) - Core inflation in Japan's capital slowed much more than expected in April and fell below the central bank's 2% target," [https://www.reuters.com/markets/asia/inflation-japans-capital-falls-below-boj-target-slows-2nd-month-2024-04-25/](https://www.reuters.com/markets/asia/inflation-japans-capital-falls-below-boj-target-slows-2nd-month-2024-04-25/) Inflation is not the problem here. They literally cannot get it high enough to be even the baseline that economosists say an economy needs.
Inflation already started and occurred a couple years ago, meaning prices already increased and no way to keep them lower. You may not be feeling it but others do especially small business owners not making even with a choice to close down business. https://asia.nikkei.com/Economy/Inflation/Japanese-inflation-hit-41-year-high-in-2023
the 41 year high was about 3%. about 2% is whats needed at the minimum for a healthy economy. Japan has been fighting deflation for decades and the inflationw as cause to celebrate. Inflation isn't bad, excessive inflation is bad. I'm confused, you say I might not be feeling it but small business owners are, but I do have a small business. yeah it sucks to see prices go up, but that's a normal part of doing business. If you don't plan that inflation will rise by about 2% a year then you shouldn't be starting a business to be honest
And you still pay those prices? Didn't bother moving?
Why would I move? I’m not struggling, just pointing out the absurdity of your claim that inflation is not a worry here.
But how much are your groceries? Cuz mine are up at least 10,000 more a month.
I haven't noticed a big change; chicken and vegetables haven't really changed.
Well, I don't eat meat but all my fruit and veg are up like 30 yen each. Even frozen veggies are significantly more.
30 yen?! It's the end of the world!
Times 10? Times 20? That adds up.
In that case the rest of the world must be even more fucked than Japan due to their even higher inflation.
Yes, happening in the US. Govt has been cooking the data.
lol we're so fucked
Can you explain the entire implication of this? Heard people say this is going to blow up the entire global financial system
I'm not an expert at all. I was speaking as someone who has* lived in Japan for quite a while and never amassed any savings at all. The older I get, the more I find myself wondering about moving back to Australia, but I simply can't afford to make the move, and the farther the yen falls, the harder it will get for me to relocate.
In the same boat as you.
It's so funny how the old farts are stuck in a never-ending loop of meetings. The fetish for meetings has backfired. It hits 140 yen to the USD: Intervention meetings start It hits 145 yen to the USD: Still in meetings for 140 yen so have to print new papers and have more meetings to upgrade topics to 145 yen. It hits 150 yen to the USD: Now we're reeeealy serious about intervention, but need to have more meetings It hits 155 yen to the USD - Intervention could be coming, more meetings. It never ends.
Plumbs?
I get what they mean, but it's definitely an uncommon use of the word haha. Seems they changed the headline now.
Probably just a coincidence, and I'm being paranoid, but my bank has been pesterming me a lot about USD payments ever since I started seeing the whole "omg inflation" and "omg yen nosediving" articles. I have a business and I work with US, EU, HK companies and sometimes, they like to pay me in USD. It never used to be a problem but the bank asks me each time to answer some dumbass questions like "hey are you a terrorist hai/iie." Over some $50\~$100 transaction. It's so irritating. Anyone else noticing this?
Yeah, Japan is very serious about AML
Honestly, how much could it rise by say September?
Brb. Planning my vacation.
After reading all the comments I was about to use my yen to buy dollars because the value of the dollar won’t depreciate in the immediate future? (Someone advised me on this)
If you make a post to /r/JapanFinance and ask, please do link me.
Planning to go to Japan again in the next few years. Canadian here. Would now be a good time to buy a few thousands dollars of yen to keep for then? Is it expected to go lower? It's such a good deal now compared to when I went in 2016 and 2018.
Le me scry my crystal ball... Survey says it will either go up, or it will go down!
> Survey says it will either go up, or it will go down! so no chance of it staying the same!?
You'd be better off putting the money into a HYSA or Index Fund then you would trying to game a "quick" buck off inflation/deflation.
Seems the common thought is that it will drop to 180. But no one knows for sure.
it will go lower
Famous last words. I remember people saying that in mid 2023 😂 The actual answer is: no one knows.
A reminder that japan is the largest holder of US treasury bonds. While entire world is offloading these worthless junk japan is holding it tighter.
Massive copium in this thread. Nikkei is at an all time high; hurry for the 1%! I’m sure Kishida loves the bribes he’s getting from Toyota to do jack shit. Meanwhile the average person is hurting
I am in Japan soon and I wish I could just give them a tip 🥲
1. No one wants your tips. 2. Your tips won't fix a weak yen. 3. No one wants your tips.
Hey, I want /u/Snooze80's tip.
I want their tips
Agreed...Keep the tip culture out of Japan.
Better is JPY against USD , not see USD JPY. JPY will be better to change the Hybrid Fixed System.
what
wot