Text: Historical Records of Landscapes
Edited |
In April 2024, the competition between China and the United States in the financial field has entered a white-hot state of confrontation. At this critical moment, the yen suddenly depreciated sharply, with the exchange rate falling to 154 yen per dollar, the lowest point since 1989.
Some sensitive observers have realized that the United States may have decided to engage in an economic life-and-death contest with China and may prepare for that competition by raising interest rates. If this is true, Japan could face unprecedented economic challenges.
According to the Associated Press, the yen's exchange rate against the US dollar continued to decline this week, and by noon on April 17, the yen had approached 154.7 against the dollar, and the previous night, the exchange rate had fallen to 154.78.
Since last year, the yen's continued depreciation has led to the bankruptcy of many companies that cannot afford the rising costs.
Tadashi Yanai, chairman and CEO of Fast Retailing, commented that the decline in the value of the yen has not only had a negative impact on Fast Retailing, but has also taken a toll on the economy of Japan as a whole.
While some have expressed reservations about this concern, believing that the decline in the Japanese stock market is a short-term phenomenon and is expected to rebound later, in fact, signs of a subsequent decline have already been seen during the Japanese stock market rally.
This is because the dominance of the Japanese stock market is no longer in its own hands, but has been influenced and manipulated by the United States.
Starting at about 25,000 points at the beginning of last year, the Japanese stock market has experienced a rally, until it peaked at about 41,000 points, an increase of nearly 40% during this period.
At the same time, Japan's economy has been very weak, growing at less than a tenth of the stock market gains.
Just as the Nikkei index was peaking, Goldman Sachs Group Inc. announced that it would withdraw from its transaction banking business in Japan, a move that seemed to foreshadow the changes to come.
Goldman Sachs' decision took place in mid-March, and by mid-April, the Japanese stock market began a continuous downward trend, and immediately after Goldman Sachs announced its withdrawal, there was a massive sell-off of Japanese stocks and a redirecting of funds to Indian stocks.
All these signs suggest that the U.S. layout in Japan may have reached the stage of harvest.
On April 17, 2024, Ken Kobayashi, president of the Japan Chamber of Commerce and Industry, made a point that Japan's financial regulators should work with their counterparts in other countries to maintain the stability of the yen's exchange rate through appropriate intervention in the foreign exchange market.
Then, in a speech at the Peterson Institute for International Economics in Washington on April 19, BOJ Governor Kazuo Ueda hinted that the central bank is evaluating the size of its bond purchase program in the future.
Japan Ōgyo 长长 Kazuo Ueda
Despite the alarming and precautionary measures taken by the Japanese government and central bank, it seems difficult to curb the wave of massive market selling of the yen.
The most fundamental reason for the current sharp depreciation of the yen is the difference in interest rates with the United States, which is currently 0.1% in Japan and 5.5% in the United States.
In the face of the current situation, it seems that the only response is to hope that the Fed will be able to cut interest rates in the future.
Since 2022, Japan has been expecting a reduction in interest rates, but the U.S. has been unusually firm in its monetary policy stance, not only has no intention of lowering interest rates, but has frequently reported that it may continue to raise interest rates.
JPMorgan Chase Chairman Dimon put forward some of his views on April 8, predicting that inflation and interest rates in the United States are likely to continue to exceed current market forecasts in the coming years.
He further noted that the Fed is likely to raise interest rates to 8%, and JPMorgan Chase has already taken corresponding preparations for this.
If interest rates in the United States do rise to 8%, the value of the yen could take a huge hit, leading to massive capital outflows to the dollar and the US market.
So why didn't the US choose to lower interest rates? While some might point out that the CPI in the US is on the high side, inflation in the US is actually not particularly high when compared globally.
There are two main reasons why the United States insists on not cutting interest rates:
First, the dollar volatility triggered by the Fed's interest rate hikes has not really affected any major economies, and while it has hit the EU hard, the impact on China has been relatively limited.
Second, not only is the U.S. not only not over its financial competition with China, but also worried about where the massive amount of dollar capital released will go if interest rates are lowered at this time.
The United States is particularly concerned that the money will flow to China, investing in China's emerging industries, such as new energy, large aircraft manufacturing and shipbuilding, which are growing rapidly.
Jamie Dimon, Chairman and CEO of JPMorgan
Based on these considerations, the Fed has chosen to maintain a high interest rate policy for the time being, and has no intention of lowering interest rates. In early April, JPMorgan Chase & Co. Chairman Dimon expressed Wall Street's view that the Fed could raise interest rates to 8%.
Although many people were skeptical about the matter at first, the potential situation is becoming increasingly difficult to ignore as signs emerge now.
Wall Street bears have already begun to collectively target Japan, selling the yen in large quantities. Even if interest rates in the United States remain unchanged at 5.5%, the Japanese economy is already under intense pressure.
If Wall Street and the Fed act in concert and raise interest rates further to 6% or higher, the result is likely to be a complete collapse of the Japanese economy. In fact, the main target of this financial action is China, but why is Japan bearing the brunt of it?
The reason is not complicated: the United States has found that direct action against China has limited effect, so in order to maintain its economic advantage or to gain a better position in the economic competition with China, the United States has chosen to harvest its ally Japan first, as a way to accumulate capital to compete with China.
This series of financial operations has had a great impact on Japan, and the Japanese economy is already in dire straits.
In recent years, Japan has suffered successive setbacks in areas such as LCD panels, white goods, smartphones, and the Internet industry, and has even been surpassed by China in the traditional strength of automobile exports.
Since 2000, Japan's economic growth has been the only one among the top 10 countries in the world by GDP, with an average annual growth rate of -0.87%.
Whether Japan will be able to recover after suffering such a severe financial blow from the United States has become a serious question.
Information sources:
"Yen, Plummeting", China Fund News
"JPMorgan Chase CEO Warns: U.S. Interest Rates May Soar to Over 8% in the Next Few Years!" Wall Street News