"Can the yen buy the bottom?" As the yen exchange rate continues to fall, many netizens have paid attention to "hoarding yen".
The Red Star Capital Bureau noted that the so-called "yen hoarding" refers to the buying and selling of yen foreign exchange on the bank APP, which is regarded as a new way of financial investment. To put it simply, it is to buy when the yen exchange rate is low and sell when the exchange rate recovers to obtain the benefit of yen appreciation.
Is "hoarding yen" really profitable? Ms. Chen (pseudonym), who works in the financial industry in Beijing, made a calculation after making a purchase and found that the expected return on buying and selling yen foreign exchange was not as high as she had imagined. She said that now the threshold for buying and selling foreign exchange is low, and the mobile banking app can be operated, which makes people feel too simple and ignore the risks.
On April 14, Tan Yaling, president of the China Foreign Exchange Investment Research Institute, was interviewed by Red Star Capital Bureau. She said that investing in the yen is more complicated, and from what she has observed and learned about foreign exchange, there are more people who lose money in yen than people who make money.
Hoarding yen has become a new way for young people to manage their finances
"The feeling of buying yen and buying stocks"
Mr. Wang (pseudonym) from Shanghai is one of the members of the "Yen Hoarding". On April 14, Mr. Wang told the Red Star Capital Bureau that last summer, the yen exchange rate fell to about 5.1 (100 yen to yuan), and he recalled that the exchange rate was as high as 6.8 when he was studying in Japan, and he felt that the yen exchange rate was at a low level at that time, and he exchanged 3 million yen for investment and tourism considerations. Later, the yen exchange rate continued to fall, falling below the "5" mark, and Mr. Wang continued to "replenish" to 5 million yen.
On social platforms such as Xiaohongshu, there are not many people like Mr. Wang who "hoard yen", and some netizens shared the strategy of "hoarding yen", saying that they "feel like buying yen and buying stocks".
The picture is from the Xiaohongshu APP
However, the Red Star Capital Bureau found that many netizens do not have a deep understanding of foreign exchange investment, and are more likely to follow the trend to buy. A comment said, "Some time ago, the yen rose in a wave, and a bunch of unknown bloggers predicted that the yen was about to break 6, and many people bought it at 4.85 and followed the trend and hoarded a wave." ”
The yen exchange rate did not rise all the way as bloggers predicted, but hit a new all-time low. On April 10, the yen fell sharply in the New York foreign exchange market, depreciating to 153.24 yen per dollar, the lowest level since July 1990. The yen exchange rate against the yuan also hit a multi-year low, and from April 10 to 15, the yen exchange rate against the yuan continued to fall, and as of about 11 a.m. on the 15th, 100 yen was exchanged for 4.70 yuan, a new low in 2024.
Ms. Lu (pseudonym), also from Shanghai, told the Red Star Capital Bureau that she bought yen foreign exchange for tourism, but fortunately the amount (loss) was not much. Mr. Wang also said that reading the posts on social media every day "buying the bottom of the yen" did have an impact on him, "Now I don't believe a word, and I will exchange (foreign exchange) when I have a need." ”
Ms. Chen, who is engaged in the financial industry in Beijing, told the Red Star Capital Bureau that one day she saw a lot of posts saying that the yen exchange rate was very low, and she opened the bank app and found that the yen exchange rate was the "low" mentioned in the post, so she bought a little.
But the next day, Ms. Chen did the math and found that the expected return from buying and selling yen foreign exchange was not as high as she imagined - buying 100,000 yen when the exchange rate of the yen against the yuan was 4.75, when the exchange rate rose to 4.8, she could only earn 50 yuan, with a yield of 1.05%, and when it rose to 4.9, she could earn 150 yuan, with a yield of 3.16%. It is worth mentioning that Ms. Chen's calculation does not take into account the "friction cost" caused by the bank's bid-ask spread, that is, the difference between the bank's spot exchange bid and sell price.
Ms. Chen said that there are certain risks in buying and selling foreign exchange, which requires strong analytical skills, but now the threshold for buying and selling foreign exchange is low, and mobile banking apps can be operated, which makes people feel too simplistic and ignore the risks.
President of China Foreign Exchange Investment Research Institute:
Investing in the yen is more complicated, and there are more people who lose money than they make money
On social platforms, investors follow the trend to buy yen, hoping to obtain appreciation gains through the future recovery of the yen exchange rate, on April 14, Tan Yaling, president of the China Foreign Exchange Investment Research Institute, was interviewed by the Red Star Capital Bureau. She said that investing in the yen is more complicated, and from what she has observed and learned about foreign exchange, there are more people who lose money in yen than people who make money.
Tan Yaling said that Japan's monetary policy is more affected by external factors, and the relationship between the yen and the yuan is more complicated. Because the yen depends on the relationship with the dollar, and the yuan depends on the logic with the dollar. At present, the yen is depreciating extremely, and the renminbi is also depreciating against the dollar, so there is great uncertainty about whether the renminbi will appreciate or depreciate against the yen in the future.
Talking about the reasons for the decline in the yen exchange rate, Tan Yaling said that it is mainly due to the impact of interest rate differentials between the United States and Japan. According to CCTV financial reports, some analysts pointed out that the reason for the rapid decline of the yen is that market investors believe that the interest rate differential between the United States and Japan will remain at a large level. On the one hand, while the Bank of Japan raised interest rates for the first time in 17 years in March, marking the end of the era of negative interest rates in Japan, the policy rate remains close to zero. At the same time, the Bank of Japan stressed that it will continue to maintain an accommodative monetary policy. On the other hand, given that US inflation remains higher than expected, investors believe that the Fed is likely to delay cutting interest rates.
For ordinary investors, Tan Yaling also reminded that foreign exchange investment should be legal and compliant and enter the market through a legal platform, and second, do not blindly follow the trend and fully consider market risks. She said that investing in the yen also needs to consider the cost of stagnation time, and investors may be more likely to see the yen appreciate, but there is no interest rate income after converting to yen, and this cost should also be taken into account.
The CITIC Securities research report pointed out that the resistance to the appreciation of the yen in the future is still large. On the one hand, domestic demand is expected to remain subdued until real wages rise. The Bank of Japan (BOJ) said in March that it would choose the appropriate level of policy rate based on prices and the economic outlook, so it is expected that the probability of a rapid rate hike by the BOJ is low.
On the other hand, the U.S. economy is still resilient, U.S. inflation stickiness still exists, and the Fed's interest rate cut this year is expected to be only 75bps in an optimistic scenario, and there is a possibility that the timing of interest rate cuts will be moved back. The large gap between the interest rate differentials between Japan and the US and the growth momentum of the two countries is likely to persist for a longer period of time, which may continue to limit the strength of the yen.
