CPT Markets Foreign Exchange Analysis: Can monetary easing save the market ? Is the Japanese yen depreciation beneficial to the return of industries?
The US Federal Reserve saw another hawk. Such a strong hawkish action led to the US dollar breaking through the high-end range and rushing to 109, forcing the Asian currency to fall helplessly. Among them, the Japanese yen shocked the market the most, rewriting the lowest point in 24 years, and actually depreciated the 140th level, which made many financial experts look at it.
I think investors who are paying attention to the global economic trends know that the United States and Japan have very different views on monetary policy . The former is to continuously increase interest rate hikes to combat inflation, while the latter is to continuously maintain loose policies to try to save the economy.
Many experts predict that the interest rate spread between the United States and Japan will continue to expand, so the yen will continue to depreciate. As Japanese corporate managers' confidence declines and manufacturing industry shrinks, the Bank of Japan has also shown that considerations for maintaining economic growth will be preferred over controlling inflation. Therefore, it reiterated that it will continue to maintain loose policies, push up wage levels, and attempt to create stable inflation, but it also makes the monetary policies of the United States and Japan significantly diverge, and the interest rate spread between the two countries is expected to continue to expand in the future.
yen tends to depreciate for a long time. Judging from the current situation, although it has not yet fallen into a state of regular deficit, there is still a large-scale initial income and expenditure surplus generated by overseas investment accumulated in the past. In the first half of this year, the trade deficit can be offset due to the income and expenditure surplus, ensuring regular surplus.
In an era when Japan is tending to depreciate for a long time, if you want to recover your economic strength, you will inevitably change your economic thinking. In the past, Japan has always tended to use the premise of the appreciation of the yen to carry out economic activities. However, when promoting economic growth, the market is most afraid of appreciation. Of course, Japanese companies have moved their production bases overseas.
Today is different from the past. In terms of the declining yen, it will make companies choose to move their factories back to Japan, which is prone to benefit from the depreciation of the yen. Most importantly, the rise in overseas labor costs and changes in economic security environment will also be the main reasons that drive Japanese companies to return to China. Although weak yen can be very popular by boosting exports, this is also the most troublesome problem for decision makers of Japanese currency , as the move pushes up the already expensive fuel and raw materials costs.
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