We usually believe that a country's currency depreciates in terms of exchange rate , which will be beneficial to the country's exports. In other words, to a certain extent, we think that exchange rate depreciation is a good thing, at least we don’t have to worry too much.
But in fact, if a country's exchange rate depreciates significantly, it will still have a relatively vicious impact. Let’s take Japan as an example to do a case analysis.
In 2021, the scale of GDP in Japan is about 4.9 trillion yuan, nearly 5 trillion yuan.
However, in 2022, the yen depreciated sharply against the US dollar, and depreciated by more than 20% from the beginning of the year to September 18. Some institutions in the world have predicted that Japan's GDP in 2022, calculated in US dollars, will be roughly less than 4 trillion US dollars. This number went back to the level 30 years ago in 1992 overnight.
Some friends may say, what does the GDP converted into US dollar statistics have to do with us personally, and what does it have to do with a country's economic development? Isn't it a statistical game? This is not the case with
. Let’s take a look further below. Japan is an export-oriented country with relatively scarce resources. Japan mainly exports some industrial products, and imports mainly include upstream raw materials. These upstream raw materials are mainly like iron, copper, aluminum, including oil, , natural gas, , etc., which are priced in US dollars.
Japan's large amount of resources relies on overseas imports. Against the backdrop of the sharp depreciation of the yen against the US dollar, it means that the costs paid by Japanese countries and Japanese companies in terms of resource imports will be greatly increased.
From 2021 to 2022, Japan has experienced a rare deficit in decades in terms of trade.
In the past, Japan has always been an export-oriented country, with a trade surplus every year and has accumulated a large amount of foreign exchange reserves in the US dollar. But as the current situation continues, Japan will be converted into a country with a trade deficit .
So-called, the trade deficit means that there are not many exports. This will lead to a relatively loss of Japan's wealth from a global perspective, which is relatively lost overseas.
That is to say, if the yen depreciates seriously, it will also harm the country's national wealth on a macro scale.
In fact, the difference between Japan and China is that the yen is freely exchanged, Japan’s capital account is freely flowing and unregulated, and Japanese family wealth can be freely distributed in the global market.
The income of domestic households in Japan is denominated in Japanese yen and will not change. However, in the context of a sharp depreciation of the yen compared with the US dollar, the revenue denominated by these yen has decreased less than before the depreciation, and the consumption and investment capabilities in the global market have also decreased.
To some extent, the depreciation of the yen against the US dollar has damaged the wealth accumulation of Japanese families. In fact, it will have similar impacts on China and other industries, , and economies.
Of course, there are other aspects. If the yen continues to depreciate, it will cause funds to flow from the Japanese market to overseas. From this perspective, it is not conducive to the growth of Japanese investment and the growth of Japan's economy.
or above do not constitute investment advice or guidance, and are only used as sharing of Dao Ge’s personal thoughts. Welcome to follow Daoge Dao Finance, get a financial hotspot in three minutes.
