Will the yen ever recover?

13 comments

1. Since I came to Japan, apart from a few years when the DPJ was in power, the Yen has always been a bit poo, a bit less poo, and a bit more poo. I’m sure the trend will continue.

2. from what i understand, the yen is intentionally kept weak because exports and tourism are Japan’s biggest revenue sources

   EDIT: I now know that tourism does little for Japan’s economy, however it seems it IS weak by design

3. No it won’t…

   You might think the increases in energy price especially gasoline would make the government and Boj increases the yen but kishida will simply give more monetary support so that everybody accepts the pill

4. The governor of the BOJ has said that they will consider raising interest rates once they see that wages are raising steadily, which probably means “seeing that wage have increased on a national level for 2 consecutive terms”.

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   Minimum wages have risen by 4% and the Shunto (the yearly discussion between corporations and unions regarding wages) has stipulated that wages in 2023 should rise by 5% or more, so that means that it has risen during 1 term, meaning that next year may be the turning point for the BOJ if they see wage increasing enough.

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   This also will depend on what the Federal Reserve and the EU Central Bank do, since the value of currency also fluctuates when comparing interest rates between countries, and since most people foresee a recession arriving soon… I would say that the tide could change and the yen could get pricy again.

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   On a personal level, I think the best course of action is to plan ahead so you can deal with your livelihood in any case.

5. **The GPD ranking has very little to do with Yen strength/weakness** – The biggest thing dictating that is the BoJ Rates – Which is currently and has been for the last 10+ years, set to Minus .1 or so.

   This means that buying treasuries or lending money in Japan – will result in you LOSING money.

   Which is why Rich people do NOT want to have money lying around in Japan – but rather seek to put that money where they actually get a return on it.
   Currently that is mainly in U.S/EU securities.

   *But yes*, it will likely make people lose even MORE trust in the Japanese Yen.

6. Here are some of the factors that have hit the yen since that time. There are many people who can chime in that are really good at this, but here’s a few:

   The yen actually has been hit hard by the U.S. interest rate hikes. This affects the yen directly and is currently “baked in” so to speak.

   Japan has a system called “Monetary Easing” that has been in place for a very long time. This comes in a few forms. I’ll try to expain some of them, but there are more.

   * One is Yield Curve Control. Japan has been controlling it’s bond market tooth and nail for a very long time. Bond Yield Curve control affects the Yen. This actually makes people NOT want to invest in bonds.
   * Short term and Long term interest rates. Negative Short term interest rates. 10 year JGB is around 0 percent. This also is apart ofthe above curve control.

   There currently is no insentive for foreign investors to put their money in yen.

   The Japan economy is still not doing very well. The strengh of the Japanese economy is a factor in the current yen problem.

   The government want’s a week yen.

   In the short term, the yen will probably not recover, or even get worse unless they interevene. There’s a lot they can do to solve this problem, but maybe not all of it. Hope this helps.

7. The yen is never going to recover because the government maintains a weak yen policy. Japanese exporters cash in big when they transfer overseas profits to Japan.

8. I hope so. I’m a scientist and I’ve recently refused a job in Japan partly because of the weak yen. When I moved there in 2012, it was 0.98 against the euro. When I left in 2018, it was still 120 more or less. Accepting a job now would mean earning less than I do in freaking Spain, a country notoriously famous for its comparatively low wages.

9. Japan losing its third place is not concerning at all

10. It won’t. The BOJ and Japanese government are addicted to printing cash and refuse to allow interest rates to rise. Extreme incompetence, ultimately making japanese people a lot poorer. It’s actually crazy to watch (i work in this field)

11. Yes

12. No

13. The yen will strengthen as (and when) the difference (or expected difference) between interest rates in Japan and other countries converges. My best guess is that interest rates overseas will come down faster than the rates here will increase.

    A small increase in Japan would have an enormous economic impact. I think we may see a couple of tiny increases over the next 12-18 months… maybe a total of 0.25%, which would be a huge shift.

    I don’t think the BOJ will do anything until their review of the impact on banks is complete, around April next year. By that time it is possible, especially being an election year, that we see US rates come down and the yen start to strengthen again.

    A huge lever on the yen/dollar rate is that Japan is a massive purchaser and holder of US treasuries… indeed, as a nation, of an incredible amount of non-yen assets.