The Bank of Japan has taken great pains to maintain the yen exchange rate, but in the end, it is still difficult to escape the doom of the "exchange rate collapse". This is not only a matter of life and death for Japan's national economy, but will also trigger a chain reaction in the global economy, and the world will enter the vortex of a new round of financial crisis. In the face of this "exchange rate defense war", what attitude should we have?
First, the Bank of Japan's road to bailing out the market has reached a dead end
Monetary easing is stuck in a loop
"The central bank has spared no effort to pursue monetary easing, but it has only been rewarded with the double blow of inflation and depreciation. ”
This sentence illustrates the current predicament of the Bank of Japan. For a long time, the Bank of Japan has been printing money on a large scale in an attempt to boost economic growth by increasing the money supply. But this approach has fallen into a loop, not only failing to boost the economy, but rather exacerbating inflationary pressures and the depreciation of the yen.
Even within the Bank of Japan, there are people who are deeply frustrated by this. One official, who asked not to be named, said weakly: "We have done our best, but the situation is still in shambles, and it seems that the collapse of the yen may really be inevitable." ”
The export industry is even worse
For Japanese exporters, the continued decline in the yen exchange rate is undoubtedly worse. Due to the depreciation of the yen, the price advantage of Japanese products in the international market has gradually been lost, and the profit margins of enterprises have been seriously compressed.
"Our company's profits have fallen by 30 percent, and if the exchange rate continues to fall like this, we may have to consider moving production abroad. A Japanese-funded business owner sighed.
The road to salvation has come to an end
In general, the BOJ's rescue has come to an end. Monetary easing, whether it is monetary easing or other means, has lost its due effect. At present, Japan's economic situation is precarious, and there is a danger of collapse at any time.
Second, the collapse of the yen will trigger global economic turmoil
Global financial markets are in dire straits
The collapse of the yen, the world's third-largest reserve currency, will have a profound impact on the global economy. If the yen depreciates too quickly and too much, it will lead to more volatility in global financial markets and even trigger a new round of currency wars.
"If the yen does collapse, we will probably have to withdraw all our investments in Japan, and the risk is too great. An international investor said with a tone of concern.
The fire of inflation will spread
The collapse of the yen will also cause a surge in the price of imported goods in Japan, further weakening domestic spending power. This will undoubtedly have a huge impact on the global market, and businesses and consumers in all countries will face higher inflation risks.
"Now the cost of living is frighteningly high, and if the yen depreciates again, we ordinary people will really not be able to survive. A Japanese citizen said indignantly, his words full of helplessness and anxiety.
The global economy will fall into a new round of crisis
To sum up, once the yen collapses, it will inevitably trigger a chain reaction in the global economy, leading to financial market turmoil, a sharp increase in inflation risks, and may even trigger a new round of global economic crisis. This will undoubtedly be a heavy blow to the world economy, which is struggling to recover.
3. Japan's economic outlook is bleak, but there is still a glimmer of hope for the future
Faced with such a grim situation, the Japanese government and the central bank seem to have fallen into a "desperate exchange rate situation" and have nothing to do. But have we completely lost confidence in the Japanese economy?
Although the current situation is bleak, Japan's strength and potential as the world's third-largest economy should not be underestimated. As long as the Japanese government and the central bank can adjust their strategies in a timely manner and formulate a more effective policy mix, they will certainly be able to turn the tide and regain the initiative in economic development.
Once upon a time, Japan also suffered a severe economic crisis, but in the end, they all resolved the difficulties one by one. This time, let's wait and see, and look forward to the rescue decision of the Japanese government and the central bank. After all, for this once economic powerhouse, no predicament is by no means insurmountable.