Japan 'on standby' to take all possible steps amid yen decline
Ideas:
Why would there be accelerated yen selling? Most likely, companies and some individuals are trying to take advantage of the weak yen against the US dollar.
There is probably no way to reduce the yen buying frenzy but that can probably slow it down with some steps in the currency market as needed.
Monetary, for now, most likely will continue in 2024 but the Bank of Japan has been communicating that sometime in 2024 they might begin to change policies.
Will financial markets and companies need to stay the course as maybe inflation will continue in 2024 and need to protect themselves against continued inflation.
Excessive volatility is not the best option as companies and financial markets prefer currencies to increase or decrease gradually and not wide swings either way.
If a company knows or can determine that the yen is going to be weak or weaker for a quarter or longer, they can make plans to protect their investments or buying as needed.
But if the currency goes through wide swings in either direction, its hard for a company to prepare as needed.
Japanese authorities don't want to cause any surprises in what they are going to do, so they always signal ahead of time what is going to happen.
But the Bank of Japan has to be very careful, as a weak yen seems to be very good for foreign tourism and very good for Japanese exporters. If they intervene too much the weak yen might not be as weak as needed to increase foreign tourism and increase the profits of Japanese exporters.
And of course, on the opposite side, a weak yen is not so good for Japanese importers as it increases the prices of imports.
The Bank of Japan doesn't seem to mind the Japanese yen from moving in either way, but maybe they have a limit on excessive movements either way.
People's lives have been affected because of inflation and the weak yen for the good part of two years, but the Bank of Japan, seems to just let inflation run its course and for the weak yen, maybe they feel its good for the economy, overall, as long as it doesn't become too excessive.
But again, the weak yen is not so good for the Japanese domestic economy, as Japan is a resource-poor economy, and needs to import much of what it needs, and the weak yen makes imports more expensive for importers and or wholesalers, and then whomever is next in the supply chain including the final retail customer.
If the Bank of Japan has been concerned about the weak yen, and the difference between the Japanese yen and the US dollar, it hasn't really done much related to the difference between the two.
The Bank of Japan has to be very careful about intervening in the currency market, as they don't want to be seen being a currency manipulator, so maybe the reason they haven't done much intervention, and they have just let the Japanese currency, the Japanese yen, just be natural.
The spring of 2024 could be very important for the Japanese economy as the Bank of Japan has signaled it might change is ultralow policy, but that might depend on what inflation does and what companies to in April with wage increases.
Have a nice day and be safe!
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.