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The yen also plays a very important role in the international currency market. For a long time, the yen, like the US dollar, has been very common in international trade. This is because of the benefits created by the rapid development of Japan's economy in the past, especially in the context of the rapid development and prosperity of Japan's manufacturing industry, the yen has become a key reserve currency in the international monetary system.
Japan, however, has chosen to be an ally with the United States. As U.S. officials have said, adversaries to the United States often face enormous challenges, but becoming an ally of the United States is likely to face even greater dangers. As an ally of the United States, the yen has become the biggest victim of the American economic harvest.
As the U.S. dollar continues to strengthen, the currencies of many Asian economies have experienced unprecedented declines, and the yen has fallen dramatically. Initially, in order to prevent the yen from depreciating further, the Japanese government immediately decided to invest 9,000 billion yen to reverse the decline in the exchange rate.
However, the huge investment did not help Japan to really turn the situation around, but only temporarily alleviated the collapse of the yen exchange rate. As the dollar continued to strengthen, the yen once again fell below the 160 mark.
In the face of another decline in the exchange rate, the Japanese government still took measures to resist the pressure of the US economy, and even the US Treasury Secretary has issued a warning that Japan will not be allowed to take any measures, and has also included Japan in the list of exchange rate monitors.
However, the decline in the yen exchange rate has not only attracted widespread attention from the international community, but will also have a series of reactions that will have a serious impact on the Japanese economy. In the face of this economic storm, Japan is likely to become the first Asian country to be destroyed by the dollar.
You must know that Japan's economic development is very dependent on the outside world, and as an island surrounded by the sea, the constant depreciation of the currency means that the price of imported products will inevitably soar sharply.
The rise in import prices will directly affect the cost of manufacturing, and eventually this impact will affect the general public, resulting in an increase in unemployment, and the pressure on people's lives and the cost of living will increase significantly.
The Japanese government is well aware of this, which is why it has taken decisive measures to rescue the market. The U.S. has once again issued a warning to Japan, but judging from Japan's investment of more than $60 billion, the use of such a large amount of foreign exchange reserves to deal with risks to the U.S. economy is a rare performance, and it fully demonstrates the Japanese government's determination to stabilize the market.
Because the Japanese government knows that if it fails, the subsequent repercussions will be unbearable for Japan.
The negative consequences of the decline in the yen exchange rate
Japan's economy experienced rapid growth for a period of time, and at one point it became the second largest economy in the world. As the yen exchange rate continues to decline, it means that the Japanese currency is depreciating, and it shows the trend of declining Japan's national strength. Especially after the bursting of Japan's economic bubble, it has been in a state of recession for a long time, and Japan's economic foundation has become weaker and weaker.
Over the past few years, Japan's GDP has been surpassed by China, Germany, and other countries, and some forecasters have pointed out that it will not take long for the economy to be surpassed by India if the current state of economic development is calculated. As it stands, Japan's per capita GDP is also declining rapidly.
However, against this backdrop, the yen exchange rate has plummeted, prices have risen, and Japan is a country that urgently needs to import large quantities of goods, and as the cost of imports continues to rise, the national economy will fall into the mud.
However, in the face of soaring prices, the income level of the Japanese people has not risen, and has even declined to varying degrees, and the unemployment rate is also showing a rising trend.
As a member of the G7, Japan's economic development trend has attracted widespread attention. Moreover, the influence of the G7 is gradually weakening, and Japan is no longer able to convince other countries, and it is difficult to get assistance from Western countries.
In fact, Japan's economic regression is also what the United States wants to see, after all, in this context, the United States can take the opportunity to carry out a frenzied harvest, causing the Japanese economy to fall into even greater difficulties.
Time is running out for Japan
Based on a variety of factors, the Japanese economy has entered a recession, which has led to a recession. The key reason is also the influence of the US dollar.
In the case of a large amount of money printing in the United States, it has led to a serious inflation problem, and in order to curb inflation, the Federal Reserve has raised interest rates several times in a row, and the crazy interest rate hikes will only lead to inflation continuing to rise. As a result, the United States is constantly shifting risks outward.
Due to certain deficiencies in Japan's foreign exchange control, coupled with the very serious aging problem in Japan, the international competitive position is also declining day by day in the case of a serious shortage of demand.
And the frenzied harvest of the dollar caused the yen exchange rate, which has no barrier, to plummet. Although Japan has invested more than 60 billion yuan in foreign exchange reserves to save the market before this, the effect is minimal.
With Japan's economic recession becoming more and more obvious, will Japan be able to recover from the current unfavorable situation? In this regard, some analysts believe that the most important thing for the current Japanese government to do is to preserve assets as much as possible and reduce economic losses under the financial harvest. In addition to this, it is also possible to stabilize the Japanese economy by expanding economic resources.
You know, in the face of the continuous decline in Japan's exchange rate, the Fed has not released any signals to cut interest rates. Against the backdrop of the fact that the value of the dollar is still at a high level, more and more capital is flowing to the United States, exchanging yen for dollars for more returns.
If Japan wants to salvage the current situation, it must continue to intervene on a large scale. Of course, it's hard to say what the final effect will be.
It is also possible that, as Japanese officials have argued, even if the Japanese government uses more foreign exchange reserves to save the yen from falling, it will still inevitably be diluted by a large amount of capital.
In fact, the Japanese government is running out of foreign exchange reserves, and if the current situation continues, the only way to stabilize the economic growth of companies is to expand the sales channels of their products.
In addition to the above approach, some analysts believe that the most important thing for Japan to do now is to look for new economic growth possibilities. This is because there is no way to change the current predicament facing Japan by relying solely on the traditional economic growth model, and only by finding a new breakthrough may be able to resolve the current economic crisis.
What do you think about the yen exchange rate? Welcome to discuss in the comment area!
Information sources:
Guangming.com: The unprecedented rescue efforts are difficult to cover the huge interest rate spread, and Japan's "defending the yen" action has had little effect