According to the Nikkei website on October 21, in the foreign exchange market on October 20, the exchange rate of the Japanese yen against the US dollar fell below the level of 150 yen for the first time in 32 years.

According to the website of " Nihon Keizai Shimbun " on October 21, in the foreign exchange market on October 20, the exchange rate of the Japanese yen against the US dollar fell below the level of 150 yen for the first time in 32 years. After the Japanese government and Japanese Bank ( central bank ) made an appointment with exchange rate by buying yen on a large scale, the yen exchange rate depreciated by about 10 yen compared with the high after intervention (1 US dollar to 140 yen), which vaguely showed limited intervention effect. The yen continues to depreciate because it hits the weaknesses of the Japanese economy, which cannot get rid of its dependence on low interest rates, and creates a situation where the bottom cannot be seen. The reason why the yen continues to depreciate is that behind the selling of the yen is the structural fragility of the Japanese economy. The Bank of Japan said that Japan's potential economic growth has dropped from 4% 32 years ago to 0 to 0.4% now.

On October 20, on the streets of Tokyo, Japan, an electronic screen is showing the exchange rate trend of the yen against the US dollar. ( Reuters )

Against the backdrop of declining economic strength, Japan is increasingly relying on the Bank of Japan's ultra-low interest rate policy. As low interest rates become the norm, low-profit companies that should have been eliminated can continue to survive, while competitive companies find it difficult to obtain talents and funds. Japan has fallen into a "vicious cycle" of weakening economic metabolism and further decline in strength.

Bank of Japan Governor Kuroda Haruhiko repeatedly stated that it would maintain a large-scale monetary easing policy because there is a risk that a slight hike of interest rates may lead to a rapid economic cooling. This attitude is in sharp contrast to the United States, which continues to raise interest rates sharply in order to curb inflation. On October 19, the long-term interest rate in the United States rose to more than 4.1%, reaching a high since July 2008. The difference between the monetary policy of Japan and the United States is very obvious, and funds are more likely to flow from the low-interest yen to the high-interest US dollar.

In order to counter the "natural trend" that widens the spread of , resulting in the depreciation of the yen, including verbal intervention, the Japanese government and the Bank of Japan have been trying to restrain the market that tends to sell the yen. However, Urino Dasaku of Mitsubishi Ueuno Morgan Stanley Securities said that market participants see through the contradiction between the Bank of Japan's insistence on monetary easing policies (one of the factors that led to the depreciation of the yen) and the Japanese government interferes with the exchange rate by buying the yen."

However, the actions of the Japanese government and the Bank of Japan were later lacking. Japanese Finance Minister Suzuki Shunichi , who was interviewed by the media on the 20th, said: "I want to maintain a little tension in the future and pay close attention to the trends." Regarding the possibility of foreign exchange intervention, Suzuki just repeated his original claim and said: "The excessive and drastic changes caused by speculation cannot be tolerated. I will pay attention to market fluctuations. When this happens, decisive measures will be taken."

The outside world believes that the Japanese government and the Bank of Japan have turned to the policy of not clearly explaining whether to intervene. The purpose is to make the market wary of intervention through unclear explanations to effectively prevent excessive selling of the yen. But it is undeniable that this attitude will make people doubt its seriousness in preventing the depreciation of the yen.

US President Biden has not changed its attitude of allowing the dollar to strengthen. Against this backdrop, it is unknown whether the Japanese government and the Bank of Japan will intervene by buying the yen again. Some people believe that the Japanese government is conducting "secret intervention" that does not announce to the public, but some people pour cold water on it, saying: "From the exchange rate trend, it doesn't seem to be intervening."

Japanese companies are miserable. Hideaki Hori, president of YKK, a large residential equipment company, said: "The exchange rate fell below 1 US dollar to 150 yen, which was hit. (Aluminum and copper, etc.) The prices of building materials and raw materials began to fall, and the yen depreciated rapidly, and the business environment will become more severe again."

Some companies also benefited from the depreciation of the yen. "If the yen continues to depreciate, the sales of high-priced goods may increase. For tourists visiting Japan, buying luxury goods in Japan will feel cheaper."However, for any company, a large fluctuating exchange rate is a big risk.

In the UK market, due to the influence of contradictory economic policies, the pound and bonds are plummeting, and Prime Minister Tras was forced to announce his resignation. Since the Bank of Japan is unrestricted to purchase government bonds in the Japanese bond market, it will not sound the sirens of rising interest rates (decreasing bond prices). But if the implicit meaning of the rapid depreciation of the yen is ignored, the Japanese economy may lose the opportunity to recover.

Source: Reference News Network