Barron’s (May 23)
“It’s time to worry about Japan and the yen carry trade again.” Rising yields in Japan could spell potential trouble in the U.S. The latest sale of Japan Government Bonds (JGBs) “was met with much less interest than anticipated,” selling at lower-than-expected prices and higher yields. “Those higher yields are trouble for the yen carry trade, which is a bad sign for U.S. Treasuries. Money borrowed in Japan often goes to buy U.S. debt, leading to a potential domino effect.”
Tags: Carry trade, Domino effect, Japan, JGBs, Prices, Rising yields, Treasuries. Debt, Trouble, U.S., Yen
Reuters (March 10)
“Wall Street futures sank and the safe-haven yen and Swiss franc strengthened early on Monday as building deflationary pressures in China added to growth worries from a fading U.S. economy and an escalating global trade war.”
Tags: China, Deflationary pressures, Economy, Escalating, Fading, Futures, Global trade war, Growth, Safe haven, Strengthened, Swiss franc, U.S., Wall Street, Worries, Yen
Seeking Alpha (August 6)
The “market meltdown” on Monday “isn’t getting any less volatile, with things now moving in the opposite direction. Japan’s Nikkei ended the session up 10% overnight, marking its best session since 2008, following a plunge of 13% on Monday. Much of the volatility is said to have emanated in Japan, where a carry trade based on the yen went sour as the BOJ raised rates during the same week the Fed signaled its intention to cut.”
Tags: 2008, BOJ, Carry trade, Cut, Fed, Japan, Market, Meltdown, Nikkei, Plunge of 13%, Up 10%, Volatile, Yen
Financial Times (June 5)
“India’s benchmark Nifty 50 rose 2.3 per cent following a sharp sell-off on Tuesday after a shock election result.” Meanwhile “Japan’s Topix index led losses as it dropped 1.4 per cent, driven lower by a decline in the financial and energy sectors. The yen was the region’s worst-performing currency as it fell 0.6 per cent against the dollar to ¥155.75.”
Tags: Benchmark, Currency, Decline, Election, Energy, Financial, India, Japan, Nifty 50, Sell-off, Shock, Topix, Worst-performing, Yen
OilPrice.com (May 24)
De-Dollarization has begun. In China, the majority of cross-border payments had always been in dollars. “In March 2023, the share of the RMB in China’s settlements surpassed the USD for the first time.” In other transactions, the currency’s progress may be masked. For example, “the Bank for International Settlements reveals that, in 2022, the USD remained the most-used currency for FX settlements. The euro and the Japanese yen came in second and third, respectively.” However, “the Chinese renminbi, though accounting for a relatively small share of FX transactions, gained the most ground over the last decade. Meanwhile, the euro and the yen saw decreases in use.”
Tags: BIS, China, Cross-border payments, De-Dollarization, euro, FX, Japan, Renminbi, RMB, Settlements, Transactions, USD, Yen
The Economist (May 4)
“It is easy for investors to lose a fortune in the financial markets—and even easier for governments.” When Japan tried to prop up the yen in 2022, the nation “spent more than $60bn of its foreign-exchange reserves,” but supporting a currency “is expensive and futile.” Since breaking the ¥160/$1 barrier, there are rumors of another intervention. As long as the giant interest rate gap exists with the U.S., Japan would be “wrong to try to prop up the yen.”
Tags: $60bn, ¥160/$1, 2022, Currency, Expensive, Financial markets, Forex, Futile, Governments, Interest rate, Intervention, Investors, Japan, Reserves, Yen
Bloomberg (April 30)
“Regardless of how pragmatic propping up the yen after such a poor run may sound, the question is whether it would be wise…. With US rate sentiments weighing heavily on the yen, an intervention would be no lasting solution in the event of a hawkish Fed pivot.”
Tags: Fed, Hawkish, Intervention, Lasting, Pragmatic, Propping up, Rate, Sentiments, Solution, U.S., Wise, Yen
Bloomberg (September 21)
“The value of the yen has slumped to the lowest on record, as measured against a broad basket of its peers and adjusted for inflation,” the Bank for International Settlements found based on data from 1970 onward. This serves to “underscore the pressure on the Bank of Japan to normalize its ultra-easy monetary regime, which continues to weigh down the nation’s interest rates and weaken the currency. The drop in the so-called real effective exchange rate means Japanese have to pay more for imported goods and services at a time when wage growth is failing to compensate for inflation.”
Tags: BIS, BOJ, Currency, Imports, Inflation adjusted, Interest rates, Japan, Normalize, Pressure, Real effective exchange rate, Record, Slumped, Ultra-easy, Wage growth, Yen
Bloomberg (December 20)
“It is hard to overemphasize the importance of” the BOJ’s latest “policy change. Starved of yield domestically and with the yen on a vicious weakening trend, Japanese investors have turned to bond markets elsewhere where yields are higher…. This change in policy is likely to make the yen much less of a one-way bet.”
Tags: BOJ, Bond markets, Importance, Investors, Japan, Policy change, Weakening trend, Yen, Yield
Market Insider (September 30)
“Japan and Korea have dumped billions of dollars into the foreign exchange market to prop up” their currencies. Nevertheless, “the dollar has surged 26% against the yen and has risen 21% versus the won.” The yen and won are hardly unique. “Both developed and emerging market economies, have slumped against the dollar,” but both currencies “have also been hurt by trade deficit concerns” as their “economies are importers of oil.”
Tags: Currencies, Developed, Dollars, Economies, Emerging, Forex, Importers, Japan, Korea, Market, Oil, Prop up, Slumped, Surged, Trade deficit, Won, Yen
