yen is about to collapse, the US dollar fell below 148 against the yen, hitting a new low in 32 years, and the depreciation this year reached 29.22%. The reason why
caused the sharp depreciation of the yen was mainly due to the inconsistent monetary policies of the two countries.
The United States continues to raise interest rates significantly , the US dollar tightens, and the US dollar circulating in the market is getting less and less. Japan still maintains ultra-low interest rates. The short-term interest rate is negative 0.1%, which is also the only country in the world that maintains the negative interest rate . With such a maverick policy, it is not difficult to understand that the depreciation range is also maverick, while the long-term interest rate is zero.
USD is getting smaller and smaller, and money is becoming more and more valuable; while the yen maintains the same scale, and even expands the scale of the yen in the circulation market, becoming less and less valuable, so the yen is depreciating against the USD. The main trade in the world is calculated in US dollars. Watching the yen to the US dollar continue to depreciate, the yen becomes less and less valuable. If it were you, what would you do?
From the perspective of maximizing interests, a sensible person will decisively sell the yen and buy US dollars to maintain financial management value. Therefore, a large amount of capital in Japan will flow out of Japan, and corporate funds are facing a shortage of shortage. Enterprises are short of funds and weak economic growth. If economic growth is needed, Japan will release money again and expand the scale of treasury bonds . The problem is that the current treasury bond trading volume in Japan has actually been "zero" in five or six trading days. What does it mean that without the influx of external capital, the development of enterprises will fall into a stagnation.
For example, Huawei spends more than 100 billion yuan in financial expenses every year for research and development, which is also an important factor in Huawei's ability to maintain its strength at the top of the world. There is no influx of funds now, which means insufficient R&D, the speed of product updates, iteration and upgrading has stagnated or slowed down, and the core competitiveness has declined, and the development of the enterprise will be limited. Once caught up by other companies, it will lead to a situation where one step is wrong and one step is wrong.
According to the forecast of International Monetary Fund , the US economy is in a state of stagnation, and GDP has grown by only 1%. China's domestic situation is not in good condition and cannot reach its GDP target of 5.5% this year, but it still maintains about 3% and is forecast to grow by 4.4% next year. The United States has stopped moving forward, China is moving forward slowly, and its economic output can defeat the United States after a few years, becoming the world's largest economy, .
yen depreciates so much, why doesn’t Japan follow the US interest rate hike to curb the depreciation of the yen! This has to be said of Japanese debt. Japan's government bonds are US$10 trillion, while its GDP in 2021 is US$4.9 trillion. It means that the GDP ratio of government bonds accounts for more than 200%.
USD Treasury bond scale reaches the upper limit of US$31 trillion, but compared with the US$23 trillion GDP in 2021, the proportion is only 137%, far lower than Japan. The Chinese government bonds held by foreign capital are 2 trillion US dollars, which can be put aside compared to the United States and Japan.
If Japan raises interest rates, it will break the zero-interest rate monetary policy. First of all, if you add less, it will be of little use. If you add more to 3% or 4%, the repayment will reach 300 billion or 400 billion US dollars in a year. Japan's economy has slowed down. Is there so much fiscal revenue to pay off its debts? Without so much money to repay the debt, we can only continue to borrow new debts to exchange for old debts, expand the scale of government bonds, and thus fall into a vicious cycle. No, the current transaction volume of treasury bonds is zero, which means it is difficult to borrow new debts in the future!
Now Japanese officials have stated that they should take action to curb the depreciation of the yen. The simplest, direct, and crudest way is to use for foreign exchange reserves . Currently, Japan's foreign exchange reserves are US$1.2 trillion. Last month, it has intervened in the exchange rate , bought the yen and sold the US dollar. The foreign exchange reserves in September decreased by more than US$50 billion.
The trade volume of the United States and Japan in 2021 is about 200 billion US dollars. In addition to other countries, Japan must retain at least 500 to 600 billion US dollars in foreign exchange reserves to maintain the circulation of foreign trade trade. Therefore, Japan only has 500 billion US dollars of foreign exchange reserves left to intervene, judging from the effect of the previous 50 billion US dollars of intervention.The effect is not without it, it just fell from 145 to 144 and was only one yen... and then rose to 148, breaking through the 32-year high.
So all the 500,000 and 600 billion US dollars can be smashed. If this does not suppress the depreciation of the yen, and I will continue to be harvested by my elder brother. Japan is probably like the 1990s, and it will lose another decade of development.
Of course, there is an extreme situation above. It is estimated that if you spend more than 100 billion US dollars, you cannot stop the decline. Japan is probably going to give up the ultra-low interest rate monetary policy. At the same time, promote domestic development and strive to earn more extra money, otherwise you will only spend but not in, and you will be done sooner or later. For example, Japan has recently completely relaxed the control restrictions on the tourism epidemic and is not limiting the number of tourists. Previously, the upper limit of 50,000 tourists was announced, and all the upper limit was removed in just a few weeks.
said that it was the lifting of the upper limit of 50,000 tourists, and I felt it was unnecessary. Because Japanese tourists mainly come from China, look at the number of tourists in China during the National Day holiday, and they are not very good at home, how could there be so many tourists going to Japan to visit? Japan is also thinking about how much subsidy it can calculate as much as it can!
Let me say something off topic:
China's total real estate value is 300 trillion yuan, while GDP is more than 100 trillion yuan, accounting for more than 300%
The market value of the US stock market is more than 60 trillion US dollars (about 450 trillion yuan), while GDP is 23 trillion US dollars, accounting for 260%. Of course, US stocks have plummeted so much recently, and its market value is estimated to have dropped by US$6 or 7 trillion.
Japan's government bonds just mentioned 10 trillion US dollars, while GDP is 4.9 trillion US dollars, accounting for more than 200%.
Therefore, a cliché saying is circulated: China's real estate, US stocks, and Japan's government bonds.
