Japan and Currency Manipulation: Updated June 29, 2024.

 

US puts Japan back on currency manipulator watch list after 1 year

Article Source: https://mainichi.jp/english/articles/20240621/p2g/00m/0bu/004000c

Ideas:

So if a country has a significant trade surplus with the US. that means it might be a currency manipulator. That criteria doesn't seem fair, as Japan, is a significant export trade country, its logical to do business with markets that want and need Japanese export product such as Japanese cars.

Unfortunately, some of this might be political, as in the 1980s' when Japan was flooding the US market with Japanese products, which seemed to be in high demand at that time, but US companies were upset that Japanese products were so popular in the US at that time, and maybe the problem was not Japanese products but US products which were not very good at the time.

So any country that has a significant trade surplus with the US might be put on the list just because that countries products are popular in the US. It doesn't seem logical as trade should be based on demand for products not whether one has a trade surplus. 

Japan is a resource-poor country, which means it has to import much of what it needs, and at the same time, its having challenges with inflation, which might cause its currency to be weak compared to the US dollar or Euro.

And at the same time, as Japan is a major export country, its exports tend to usually be more than imports due to the weak Japanese yen, which seems to help Japanese export companies, which means it increases Japan's current account.

You can't blame a country for doing what is does best, which is exporting its products around the world, and if countries are upset about that than those countries are upset with the global trading system in place.

The Bank of Japan chose to follow a different strategy related to inflation and just let inflation run its course and keep its ultra low interest rate policy, compared to the US and the EU, which increased interest rates, to fight inflation.

As a result, because the US rate and the Japanese rate significantly not even close together, the Japanese yen, has weakened significantly.

So its only natural that the Bank of Japan intervenes with its currency to try and keep the Japanese yen from becoming even more weaker, as the weak Japanese yen, has caused a lot of challenges for the Japanese domestic economy and Japanese importers.

So Japan is just on the list of countries that are being monitored for currency manipulation and its not the same as being on the list as a currency manipulator.

Again, its seems a little like the 1980's when Japanese products were very popular in the US and US companies went to the US government and complained that they couldn't compete with the low priced Japanese products, when it reality, Japanese products were far superior to US products at the time.

Most likely the US trade department puts out the list with no real intention of putting any country on the currency manipulator list, but more of just an idea of what is happening related to trade with the US and other countries.

At the same time, its seems China is always on the US trade departments radar, meaning its always being watched very carefully, while the other countries are just seen as having significant trade situations with the US.

And even China, might be more political than trade related as there might be a trade war with China that has spilled over to the political side and not just the trade side.

But back to Japan, as Japan is going to do what its going to do, being a major export country and as its Japan's products are popular globally, including in the US, it will continue to export to the US or any other country where Japanese products are popular.

And its going to monitor the Japanese yen, and inflation, and take the needed and appropriate action to help the Japanese economy, regardless of what the US wants or thinks.

Have a nice day and be safe!