On September 21, with the implementation of the 5th rate hike of the Federal Reserve in , the storm of appreciation of the US dollar is getting stronger and stronger, leading to a new round of depreciation in the global currency market. The yen exchange rate has accelerated its decline since September. After breaking through the 1 dollar against 144 yen on September 7, hitting a 24-year low, the yen exchange rate on the 14th day fell again, approaching the integer mark of 1 dollar against 145 US dollars.
At the monetary policy meeting on September 22, the Bank of Japan decided to maintain a large-scale monetary easing policy that induces short-term interest rates to be negative 0.1% and long-term interest rates to be around 0%. After the Japanese government took action, the yen rebounded slightly, and the dollar against the yen fell by more than 2%, to around 1:140.3. However, this situation did not last long, and the US dollar-JPY exchange rate returned to the level of 142.26 yen for 1 dollar.
According to CCTV News, Japanese Prime Minister Kishi Fumio Kishida said on September 22 that the Japanese government will closely monitor market fluctuations with a "high sense of vigilance". Once the yen has "excessive flow" due to speculative activities, the government will intervene again if necessary.
The author believes that the main reasons for the sharp depreciation of the yen this time are as follows:
1. The spread between Japan and Europe and the United States has expanded, exacerbating the trend of selling the yen to buy the US dollar and the euro
Since the beginning of this year, the Federal Reserve has implemented five consecutive interest rate hikes. The Bank of Japan has been forced to implement ultra-loose monetary policy in the face of weak domestic demand and weak economic recovery. However, the huge difference in the monetary policies of the US central bank in Japan has caused the yen exchange rate to plummet.
On September 2, the exchange rate of the Japanese yen to the US dollar had fallen from 115 yen to 1 US dollar at the beginning of the year to the 140 yen range, setting a new low in 24 years. Since the yen has depreciated by more than 20% this year, the complaints among Japanese people about the depreciation of the yen have continued to rise.
2. Japan's economic development is sluggish, export volume has dropped sharply, and the economic value created has become lower
Japan is a typical country with resource import and product export types, and its dependence on foreign trade is quite high. However, in recent years, the export volume of Japanese products has shown a trend of significantly decreasing, and Japanese products have gradually lost competitiveness in the international market, which is an important reason for the continuous depreciation of the yen.
Take cars as an example. From January to June 2022, Japan's automobile exports were 1732,649 units, a decrease of 14.3% compared with the same period last year. During the same period, China's automobile exports were 1.33 million units, and increased by 40% year-on-year. With this rate of development, China's automobile exports will likely exceed Japan next year, and the decline of automobiles, the pillar industry of Japan's economy, will mean that Japan's third-place position in the world economy will be difficult to maintain.
The yen exchange rate has a considerable impact on the Japanese economy, which is also a typical feature of the Japanese economy. The depreciation of the yen caused a sharp surge in imported goods prices, further increasing the impact of exchange rate fluctuations on the Japanese economy.
According to data released by the Bank of Japan, as the prices of imported goods continue to soar, Japanese corporate prices have risen year-on-year for 17 consecutive months. In July, the corporate price index hit a historical high since statistics were recorded. More than 80% of the more than 500 commodities in the statistics rose. If the import prices of enterprises are calculated in the yen in that month, the price will increase by as much as 48% year-on-year.
reporter learned in an interview with the owner of a vegetable store in Tokyo that with the continuous depreciation of the yen, the products that could be bought for 100 yen can be purchased now only 140 yen, and people are under great pressure now.
The depreciation of the yen will hit most Japanese small and medium-sized enterprises more severely. Many companies with low bargaining power and difficulty in passing on prices are in trouble, and many companies have gone bankrupt as a result. The continued rise in prices has led to the weak recovery of the Japanese economy being at a loss.
Bank of Japan Governor Kuroda Haruhiko pointed out that cost-pushing inflation is different from the demand expansion inflation expected by Central Bank . It not only cannot stimulate consumption, but instead suppresses consumer demand, which is not conducive to Japan's economic recovery.
Facing the depreciation of the yen, Japan has difficulty finding a suitable response, although the Japanese government has reiterated that it will adhere to a super-loose monetary policy. But experts believe that the Bank of Japan is currently in a dilemma between suppressing inflation or protecting the economy.
3. Japan's aging is becoming increasingly serious. Due to the lack of sufficient labor, its economic development is lacking vitality and is at a disadvantage in global economic competition.
Data shows that Japan's aging problem is becoming increasingly serious. The proportion of the population aged 15-64, a major labor force, has dropped to 59.4%, the lowest level in history since record. Many experts believe that the fundamental reason for the sluggish economy in Japan is that Japan lacks labor force and the aging population of Japan restricts the development of Japan's economy, because the innovative development of any industry requires people to complete it.
. In the current situation of Japan in an aging society, many industries are difficult to obtain innovation and technological upgrades, which is the fundamental reason for the depreciation of the yen.
Japan's labor market is very stable, even with the highest unemployment rate in the epidemic, it is only 3.1%, and recently it is 2.6%, with very small changes. In Japan, wages will not increase no matter how serious the work is, because it is difficult for Japan to continue to increase labor productivity.
Under this employment situation, many high-quality talents fled Japan in large numbers because the working methods and wages of Japanese people are far lower than those of other developed countries. In recent years, many Japanese high-tech talents have gone to China to look for development opportunities, which has also made up for the vacancies of high-end technical positions in some industries in my country.
4. Japan's economic structure is backward, and the development of emerging industries is seriously lagging behind
Facts have proved that Innovation is the first driving force for development and talents are the first resource for development. In today's knowledge economy era, the number of unicorns in a country is a symbol of measuring the development of emerging industries in this country. In the 2021 top 100 unicorns rankings, only 6 Japanese companies are on the list.
Today, with the rapid development of new generation information technology, Japanese society is still very conservative, resulting in its emerging industries being in a situation of overall backwardness. Today, Japan does not have a decent Internet giant. The only Internet company that can be proven is Japan's Yahoo. Its net profit in 2021 was only US$600 million and it could not enter the top 20. Until now, many Japanese people still use flip phones.
Currently, more than 86% of China's population uses mobile payments, cash payments in Japan's personal consumption still exceed 50%, which shows the conservatism and rigidity of Japanese society. The aging of the entire society has made Japan's performance in the field of innovation seem slow and conservative.
Conclusion
According to OECD (OECD ), Japan's nominal GDP this year is expected to reach 55.3 billion yen. Converting it to USD at a 140:1 exchange rate, it is USD 3.9 trillion, which is the first time that Japan's GDO has fallen below USD 4 trillion since 1992. This also means that in US dollars, Japan's GDP may fall back to 30 years ago this year.
On the premise that the current Japanese government cannot change its financial policies due to the exchange rate, to curb the continued depreciation of the yen, we can only hope that the pace of interest rate hikes in the United States and Europe will be eased and the stability of the world situation. In this process, the Japanese government, enterprises and people can only silently bear the pressure brought by the depreciation of the yen.
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