April 25,
Tokyo, Japan, foreign exchange market
The yen fell to the dollar at one point
1 dollar is about 155.40 yen,
It hit a new 34-year low.
As of press time,
1 U.S. dollar is exchanged for 155.67 yen.
Continued weakness in the yen
or stimulate the Japanese Ministry of Finance to intervene in the yen.
However, in China,
Whether it's for investment or travel needs,
The trend of the yen diving all the way has made many people excited,
"Hoarding yen" as financial management
Also suddenly "fired" among young people.
The yen exchange rate fell close to the "critical line" of official intervention
When will the authorities intervene?
During Wednesday's Asian session, the USDJPY exchange rate remained flat.
After entering the European and American trading session, the yen began to weaken continuously, and the USD/JPY exchange rate quickly broke through the 34-year high of 155. As one of the international safe-haven currencies, the decline of the yen has attracted attention.
USDJPY, EURJPY and GBPJPY (June 2022 to date)
With the yen exchange rate falling to a 34-year low, the market is focused on whether the Japanese government and central bank will intervene in foreign exchange. Japanese Finance Minister Shunichi Suzuki and Finance Minister Mato Kanda have recently made frequent statements to control the depreciation of the yen.
The recent meeting of the finance ministers of Japan, the United States, and the Republic of Korea expressed concern about the recent depreciation of the yen and the South Korean won against the US dollar. However, due to the current strong demand for the US dollar, it is widely believed that even if there is an intervention, the effect of yen appreciation may be limited.
Research institutes have long expected Japan's official intervention in the exchange rate. In March, when the dollar-yen exchange rate exceeded 150, Standard Chartered Bank (Standard Chartered Bank) issued a report that the exchange rate level of the yen was close to the "critical line" of Japan's intervention in the yen.
But throughout April this year, the "intervention" was heard only and not seen, and the yen went further and further down the road to depreciation. In just one month, the USD/JPY exchange rate broke through 155.
Bank of America said in a report on Tuesday that the dollar-yen exchange rate of 155 is the "bottom line" of the Japanese Ministry of Finance, and the Ministry of Finance will intervene if the yen falls below this level. If the Ministry of Finance does not intervene around 155, the market may quickly push the USDJPY exchange rate to 160.
March 19, Tokyo, Japan, Bank of Japan headquarters. Source: Xinhua News Agency
There has been a surge in bank currency exchange
"Hoarding yen" has become a new way to manage money?
With the weakening of the yen exchange rate, the volume of bank exchange for yen has surged.
Ms. Gao from Beijing noticed that the yen exchange rate was weakening in early April this year, and went to the bank to exchange yen once. In the past few days, she found that the yen exchange rate had dropped again, so she went to the bank to exchange 200,000 yen again.
Bank staff told reporters,
With the "May Day" holiday coming,
Recently, there has also been an increase in the number of exchanges from customers.
At present, the main purpose for exchanging yen by customers is the main use, it said
It is mainly for individual travel.
On social platforms, show yourself
There are not a few netizens who "hoard yen".
Some people think of this as a kind
A new way to manage your money.
Someone bought it and dropped 100 yuan a day
called it a "big injustice"
There are also many people who follow the trend to buy
"I don't know if it's possible to invest"
Expert: It is not recommended to buy Japanese yen
as a household asset allocation
Mr. Lu, a banker, calculated an account for reporters, if he buys 100,000 yen with 4,700 yuan when the exchange rate of the yen against the yuan is 4.7, and sells it when the exchange rate rises to 4.8, he can earn 100 yuan, "and you can buy four cups of milk tea." In Mr. Lu's view, there is no need to follow the trend and buy yen.
It is worth noting that the purchase of foreign exchange at the bank is divided into spot exchange buying price and spot exchange selling price, and the price reference is different when buying and selling. "There is still a cost to buying foreign exchange, and you have to think about whether the risks and benefits are worth it. Mr. Lu said frankly.
Experts believe that it is not a form of investment for citizens to hoard yen through "settlement and sale of foreign exchange", and that if individuals have the need to travel and study in Japan, they can hoard some now. If it is for the sake of household investment, it is not recommended to buy Japanese yen as your household asset allocation.
In addition, some members of the public are not aware of the difference between banknote and foreign exchange purchases. Experts suggest that it is more cost-effective to buy foreign exchange, because foreign exchange can be exchanged for banknotes at any time and withdrawn for use, but there is a handling fee for the exchange of banknotes for foreign exchange; moreover, foreign exchange can be freely remitted abroad, but banknotes cannot be used.
Finally, the expert reminded the public that it is best to shop around before buying foreign exchange, "When handling foreign exchange settlement and sales business, the exchange rate of each bank is not exactly the same. ”
Why is the yen depreciating?
The current round of yen depreciation actually began in early 2022. The Federal Reserve, which carried out an unprecedented monetary "big release" during the new crown epidemic, began to raise interest rates aggressively in 2022 in a "sharp turn" to deal with rising inflation, causing serious negative spillover effects on the world economy, and a number of non-US currencies depreciated sharply, and many central banks were forced to raise interest rates "accompanimently", but the Bank of Japan, which has always followed the trend of the United States, was constrained by the domestic deflationary situation and adhered to the negative interest rate policy.
As the interest rate differential between the yen and the dollar widened rapidly, the yen exchange rate plummeted: 115 yen per dollar at the beginning of 2022 fell to nearly 152 yen in October of the same year, a decline of more than 30% in the process. The Japanese government was forced to intervene three times to boost the yen exchange rate by selling dollars and buying yen.
Pedestrians walk past a real-time exchange rate display board on a street in Tokyo, Japan, September 26, 2023. Source: Xinhua News Agency
The depreciation of the yen is not all caused by the aggressive interest rate hikes in the United States, and some long-standing structural problems in the Japanese economy have also become factors driving the depreciation of the yen.
First of all, Japan is heavily dependent on imports for important resources such as energy, food, and raw materials, and its demand for the US dollar continues to increase.
After the Fukushima nuclear power plant accident in 2011, Japan's domestic nuclear power plants were shut down, and nuclear power, which originally accounted for about a quarter of Japan's annual power generation, fell to zero in 2014.
Second, Japan's trade in goods and services continues to run deficits.
According to the latest data, Japan's trade in goods has been in deficit for three consecutive fiscal years from 2021 to 2023, and although the situation in 2023 has eased significantly from the previous year, the total deficit in goods and services is still 9.8 trillion yen.
A number of experts pointed out that although the situation of inbound tourism is good against the background of the depreciation of the yen, with the in-depth development of AI technology, Japan's service fees paid overseas will increase significantly, and the problem of service trade deficit will become more obvious.
Third, although the returns from overseas investment are high, the repatriation of funds tends to decrease.
There is a saying in Japan that "there is a Japan overseas", but due to the sluggish domestic demand and shortage of manpower, Japanese companies continue to expand the scale of overseas investment, and after bringing huge profits, they lack the motivation to return to invest and choose to keep their profits overseas.
A pedestrian walks past the Bank of Japan headquarters in Tokyo, Japan, March 19. Source: Xinhua News Agency
The yen depreciated
Ordinary people's wallets have shrunk
In order to pursue higher returns, personal funds in Japan are flowing overseas. Overseas institutional investors engaged in arbitrage trading and borrowed a large amount of yen for foreign currency for investment, which also exacerbated the depreciation of the yen.
In addition, since the beginning of this year, the Japanese stock market has soared, and many people think that the Japanese economy is going to take off, but in fact, most of the people who buy Japanese stocks are foreign institutional investors, and the Japanese people have not become loose in their hands.
A clothing store on Uenoichi Commercial Street in Tokyo, Japan, August 15, 2023. Source: Xinhua News Agency
Hayari Shirai, a professor at Keio University, said in an earlier interview with the media that the excessive depreciation of the yen has reduced the purchasing power of consumers, and the investment and production of companies have slowed down.
According to data from the Cabinet Office of Japan, as of the fourth quarter of last year, personal consumption, which accounts for more than half of Japan's economy, has been negative for three consecutive quarters.
As real incomes shrink, consumers tend to opt for cheaper items: beef sales have plummeted in supermarkets, chicken has been sought-after, and domestic shipments of ultra-thin TVs in Japan have fallen for the third year in a row.
How long will the yen fall?
When it comes to the future trend of the yen exchange rate, experts analyze that although the yen is in an extremely weak state at present, the trend of major central banks such as the Federal Reserve will cut interest rates in the future and the Bank of Japan will slowly raise interest rates will not change.
Ding Ke, chief researcher at the Institute of Asian Economy, a foreign trade organization of Japan, believes that the appreciation of the yen is inevitable in the future, but the Tokyo stock market may face resistance if it continues to rise. Although Japan's position in some parts of the supply chain is still irreplaceable, it is difficult to change the general trend of Japan's economic contraction in the long run due to the low birthrate and aging population.