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E14

How Come The Yen Is Rising

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Im really confused. Gone from 133 to 126 since the crisis started. I know its something about selling offshore assets?

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Not just rising, hitting record highs...

http://www.thisismoney.co.uk/markets/article.html?in_article_id=525885&in_page_id=3

Traders are betting that Japanese institutions will have to bring home cash held abroad in order to fund rebuilding, which will rapidly increase demand for the yen.

The currency's appreciation has returned Japan's economy to the world number two spot - taking the position back from China – as it is effectively worth $266bn more now than it was a couple of days ago.

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IMHO it's because traders are unwinding carry trade positions and Japanese people (investors, companies et cetera) need the yen to pay for the reconstruction.

I can see this affecting the USD bond market and force a IR increase.

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IMHO it's because traders are unwinding carry trade positions and Japanese people (investors, companies et cetera) need the yen to pay for the reconstruction.

I can see this affecting the USD bond market and force a IR increase.

NotAYesMansEconomics has more on that line,

Peter.

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Can someone tell me - does this make it more expensive for Japan to rebuild? Is this a controllable situation? Could, theoretically, someone step in and say "look, we don't want Japan's rebuilding costs to be higher than they need to be, so we're going to freeze the Yen's exchange rate at X..."

Or, on the other hand, is this good for Japan? Doesn't a higher exchange rate improve their purchasing power for necessary imports required for reconstruction?

Can someone explain this all for a bear of small brain?

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Can someone tell me - does this make it more expensive for Japan to rebuild? Is this a controllable situation? Could, theoretically, someone step in and say "look, we don't want Japan's rebuilding costs to be higher than they need to be, so we're going to freeze the Yen's exchange rate at X..."

Or, on the other hand, is this good for Japan? Doesn't a higher exchange rate improve their purchasing power for necessary imports required for reconstruction?

Can someone explain this all for a bear of small brain?

A high yen makes rebuilding cheaper as all the imported materials would cost less. However, it makes their exports more expensive which would reduce sales of Japanese goods and therefore reduce their ability to pay for rebuilding.

The Japanese are clear on what they want...cheaper yen, hence their plea to the G7 for co-ordinated intervention to bring down the yen.

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Im really confused. Gone from 133 to 126 since the crisis started. I know its something about selling offshore assets?

The same ultimate reason that underpins all pricing, supply and demand. Lots of demand for Yen right now.

* People selling off stocks on the Nikkei; Selling Japanese stocks means you are buying Yen.

* Carry trade unwinds; Borrowers need to buy back Yen to pay off their Yen loan before Yen rises too much higher, making Yen go even higher as a by-product.

* Japanese insurance companies liquidating foreign assets; Sell assets for dollars, buy Yen.

All this means a massive increase in demand for Yen.

That's why the BoJ is 'creating Yen liquidity' (trillions of Yen) to try to balance supply with demand.

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IMHO it's because traders are unwinding carry trade positions and Japanese people (investors, companies et cetera) need the yen to pay for the reconstruction.

Yup. Put simply, there is more demand for yen, from the selling of foreign assets.

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Anyone else think that after the initial rush to buy Yen has subsided, there's going to be a massive collapse in its value?

All the factors currently pushing it up are temporary and urgent. Once they end, there's not going to be a lot backing the Japanese economy with massive debts, severely damaged production, the need for the Japanese to import lots of food, energy and commodities and the likely need to borrow massive amounts of money just to get things back to where they were a week ago.

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must go and swap my old holiday money back now then.

I'm pretty sure it was over 200 yen to the pound when I got it! (I could be wrong but it was a few years ago)

About 6 year ago it was at around the 200 yen mark and then went to 250! So you're probably not suffering from false memory syndrome!

The record for the Yen was 122 a couple of years ago, almost got there last night.

My guess is that even if the Yen weakens we'll see the Gbp weaken faster from mid-summer.

I'd love to see the Pound at 100 Yen...does anyone think I have a chance!?

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I'd love to see the Pound at 100 Yen...does anyone think I have a chance!?

If that happens I will never get back there.

Good answers folks and thanks for clearing it up

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Come to think of it it was 230 when we got it.

Sadly we spent most of it there, so I think I only have about 6000 yen lying around.

Still thats £50 I might as well have and it would have been about £25 when we got it!

Wow, imagine if I'd converted all my savings over rather than just my holiday cash. O_o

I'd be in a position to buy a family house in cash, but I'd feel really bad about the reason why.

Edited by Bear Necessities

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Anyone else think that after the initial rush to buy Yen has subsided, there's going to be a massive collapse in its value?

All the factors currently pushing it up are temporary and urgent. Once they end, there's not going to be a lot backing the Japanese economy with massive debts, severely damaged production, the need for the Japanese to import lots of food, energy and commodities and the likely need to borrow massive amounts of money just to get things back to where they were a week ago.

So, how much damage has been done?

One in 1,000 of their population has died (13,000), is it possible that only one hundredth (or 1%!)of their economy has been destroyed?

Edited by council dweller

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Repatriation of capital. Japanese authorities trying to convince G7 it's speculation and there should be co-ordinated intervention to depress yen, but G7 unlikely to agree.

That's correct, the broadsheets have got this all over them today if anyone cares to look.

Japan needs it's money back in order to rebuild it's country.

Japan holds massive proportion of NZ and Aus bonds and selling them off (demanding their money back) will screw countries like these as it is how they have been able to manage their debt - I think Japan holds 11% of NZ debt!

The question is, will the private sector also need its money back. In which case we can expect hundreds of more billions to need returning to the motherland.

Whilst Japan holds a lot of US bonds, the proportion they hold is far smaller than that of countries like NZ and Aus.

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So, how much damage has been done?

One in 1,000 of their population has died (i3,000), is it possible that only one hundredth (or 1%!)of their economy has been destroyed?

All up the Northeast coast:

Massive amounts of infrastructure destroyed or damaged.

Factories destroyed.

Fishing fleets destroyed.

Export inventory at ports lost.

Large amounts of crops lost and farmland ruined.

Entire towns and villages wiped from the map, large numbers of displaced people.

Big chunk of power generation capability removed leading to rolling blackouts.

Much of their production on a national scale stopped in the short term with ongoing disruption in the medium term.

'Just in Time' distribution system totally disrupted.

Threat of huge nuclear disaster still hanging over the nation, hampering efforts to get recovery efforts going in the area.

Of course I can't put a percentage figure on just how badly their economy has been damaged but it should be pretty obvious to anyone capable of rational thought that this represents a very, very major setback to the country as a whole.

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I do not understand, if the yen is strong, is that mean they could do a lot of QE without the worry of the yen being too weak?

So why the Japan bank just print money as USA do which help in pay their re-building cost and lower its yen.

I know there must be a reason they not printing, just not sure why.

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I do not understand, if the yen is strong, is that mean they could do a lot of QE without the worry of the yen being too weak?

So why the Japan bank just print money as USA do which help in pay their re-building cost and lower its yen.

I know there must be a reason they not printing, just not sure why.

They are just printing, that is what a liquidity injection means.

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Another side effect of this (i think i read on the market ticker a couple of days ago) was the BoJ is a big buyer of US treasuries, and as such will be out of the market for some time.

I guess that ties with an apreciating yen.

More need for helicopter Ben to printy printy then.

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All up the Northeast coast:

Massive amounts of infrastructure destroyed or damaged.

Factories destroyed.

Fishing fleets destroyed.

Export inventory at ports lost.

Large amounts of crops lost and farmland ruined.

Entire towns and villages wiped from the map, large numbers of displaced people.

Big chunk of power generation capability removed leading to rolling blackouts.

Much of their production on a national scale stopped in the short term with ongoing disruption in the medium term.

'Just in Time' distribution system totally disrupted.

Threat of huge nuclear disaster still hanging over the nation, hampering efforts to get recovery efforts going in the area.

Of course I can't put a percentage figure on just how badly their economy has been damaged but it should be pretty obvious to anyone capable of rational thought that this represents a very, very major setback to the country as a whole.

Fishermen and farmers. If the Earthquake had hit the Kansai area I'd be worried. This is what happens every few generations, the whole flood plane gets wiped out then after couple of generations the area is repopulated.(after they have forgotten)

Interestingly those who choose to are being offered 'council houses' in other parts of Japan where they can start life afresh, unlike in Kobe where 10's of thousands of temporary homes were built.

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Im really confused. Gone from 133 to 126 since the crisis started. I know its something about selling offshore assets?

The Japanese are selling their foreign assets, using the money to buy Yen, and bringing it back into the country so they can pay for all the repair and rebuilding work that is needed.

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I do not understand, if the yen is strong, is that mean they could do a lot of QE without the worry of the yen being too weak?

That's the excuse used by the Fed and BoE for QE ... apparently you can print as much money as you like and people will still flock to swap hard assets for it in a serious crisis. Doesn't really hold up in anything but the short term - once people figure out that armageddon isn't going to happen you see asset prices rise sharply again as there's now so much extra money.

So why the Japan bank just print money as USA do which help in pay their re-building cost and lower its yen.

Because if they start printing money, after the initial demand for Yen has dropped, they will find that buying all the food, energy and commodities they will need will become very, very expensive for them. ie. Yen falls on F/X, strong inflation at home.

I know there must be a reason they not printing, just not sure why.

They are already pumping mind-boggling amounts of 'liquidity' - i.e short term money - into the market. If they switch that to longer term QE money (in effect, limitless term as there is no way that any QE is going to be unwound) then they face possibly out of control debasement just when they need their Yen in order to buy stuff.

On the other hand, they don't want the Yen to be too strong as that will make their exports uncompetitive, so they will probably say they are using QE to 'balance' the economy and exchange rates. But I bet that they will QE massive amounts hoping that percieved Yen demand/strength will let them get away with it, giving helicopter Ben the excuse to follow their lead in the US.

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  • 285 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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