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43 sats \ 3 replies \ @supertestnet OP 26 Oct 2023 \ parent \ on: Why the US Dollar is Surging Against the Japanese Yen bitcoin
A weak yen allows you to export products for a while but if merchants in your country don't raise their domestic prices, foreigners will come into your country and use their hard currency to buy all your domestic products too, and even the means of production, eventually. Your workers may make a little money exporting cars, but they won't have enough money to buy stuff that foreigners already bought. You either end up with inflation or shortage. I don't think you can long have a low exchange rate and low inflation.
Given the economy's reliance on exports, Japan has historically focused on arresting sharp yen rises and taken a hands-off approach to yen weakness, which is more difficult because yen-buying requires Japan to draw on limited foreign reserves.
Some like John Vail, chief global strategist at Nikko Asset Management, say currency weakness is crucial for Japan's economy to maintain its competitiveness as a secure source of supply-chain diversification.
The above quotes were taken from this article:
https://www.reuters.com/markets/europe/what-are-consequences-yens-fall-20-year-low-2022-06-10/
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Good find. Interesting that last year they were already questioning whether Japan has enough foreign assets to intervene effectively in the fall of the yen.
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I have great difficulty wrapping my head around Japan. I try to get a handle on it, but it's a deep rabbit hole. It's amazing to me that the economy is still afloat. But, from what I read, it's unravelling now.
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