According to a Reuters report on April 24, the U.S. dollar rose above the 155 mark against the yen, the lowest since June 1990. Investors are also aware of the widening interest rate differential between Japan and the United States, so they are selling yen and buying dollars. As a result, the depreciation of the yen may become out of control.
The depreciation of the yen actually began at the beginning of 2022, when it was around 115 yen per dollar, but in October of the same year, it rose to 150 yen. In the last year alone, the yen has lost more than 21%, and if you look at the three-year decline over time, it has reached a terrible 52%.
According to UBS analysis, since most of the main forces led by Japan are export-oriented enterprises, in view of the current international economic policy, especially the United States, the yen may further depreciate, and it is predicted that by the end of 2024, the dollar-yen exchange rate will reach 160.
In fact, not only the yen, but most Asian countries, including the Thai baht, South Korean won, rupee and other currencies have depreciated a lot, especially the Korean won, which has depreciated by more than 30% since 2021, and although the mainland's yuan has also depreciated by nearly 10%, it is relatively the strongest currency.
And if you want to say that the initiator of this round of currency crash, the United States is definitely an unavoidable element. Although the United States now has one of the highest per capita GDP in the world at $82,000, there is a huge bubble behind the prosperity.
You must know that the reason why the United States can reach the size of its economy today is that its huge government debt has a lot of "credit". By the end of 2023, the total debt of the United States has reached $34 trillion, ranking first in the world for 10 consecutive years. It is precisely for this reason that the United States has been anxious about this debt in recent years, and even has to turn to China for help.
But obviously, the United States is not sincere, and seeing that the debt crisis is about to erupt, the United States still seems to want to replicate the script of harvesting Southeast Asia in 97 and carry out a new round of harvesting. The scary thing is that it seems to be possible, because the global economic situation today is so similar to that of 27 years ago.
On July 2, 1997, the Asian financial crisis began in Thailand and then spread to Malaysia, Singapore, Japan, South Korea and China. The "middle-income trap" was used to destroy Latin America's economy, and then the old trick was repeated, causing the Japanese economy to collapse, and then the crisis quickly swept through Southeast Asia like dominoes, depreciating currencies and devaluing the economy everywhere it went.
The trick used by the United States is to raise interest rates first, from the benchmark interest rate of 3.25% to 6%, and then start to cut interest rates, and at one point to 4.75%, which made everyone think that the Fed would continue to cut interest rates, so countries began to increase investment. At this time, the Federal Reserve quickly raised interest rates to 6.5%, and as a result, the currencies of most countries in Southeast Asia began to depreciate and the country's assets shrank dramatically.
Subsequently, the United States besieged the financial markets of various countries through various financial derivatives, and bought a large number of high-quality assets at extremely low prices. After a wave of operations, the United States has made a profit of nearly $2 trillion, and more importantly, at the same time, other countries are in a depression, and the gap between them and the United States is getting farther and farther.
And if we look back at the situation in the global financial markets today, it is indeed quite similar to that time. Since the beginning of 2022, the United States has begun to raise the benchmark interest rate, and from 0% to 5.5%, and the rest of the matter is very clear, from the end of last year to this year, the Federal Reserve has been releasing the news that it is going to cut interest rates, but it seems that no one believes it anymore this time.
As a country that has developed steadily in the past two years, it has always been coveted by the United States, but this time China will certainly not let the other side succeed, let alone allow financial turmoil to occur in China or even in the whole of Asia. And as the U.S. dollar settlement system gradually collapses, the renminbi may be able to create a new miracle.