gaijinpunch wrote:It was based on speculation that yen would be repatriated to rebuild --- not exactly a stupid bet. And, as it turned out, it was the right one. The short term after the quake was not hard to figure out what happened. Bonds went up, Nikkei tanked -- literally in seconds.
It was not correct, and there was no need to repatriate money after the quake. Here's why:
1) Japanese banks and insurance companies buy staggering quantities of Japanese gov't bonds. If they needed money after the quake they had plenty of funds in JPY already.
2) Insurance payouts in Japan for quake damage are restricted by law. There is a very short summary on Wikipedia, and much more reading here. Chapter 2 in particular covers the program and how it has developed over time.
gaijinpunch wrote:Fun Fact: The strongest the yen was prior to the 2011 record was days after the Hanshin Earthquake.
Not days, months. The yen barely moved immediately after the '95 quake. The bottom was in April and was not related to the quake.
gaijinpunch wrote:The country no, but you gotta think that any one in charge of a large corporation domicile in Japan has to read between the lines. IE -- BOJ is going to intervene, it's time to straighten your books out. They really only need the FX rate to be X/Y at a single moment every quarter or so.
Large corporations have their FX rates locked in months in advance and tend to be well hedged. They have to be, the amount of risk by not doing so is far too great for their businesses. The real evil of the heavily overvalued yen is the long-term damage it is doing to manufacturing in Japan.
gaijinpunch wrote:I own a company that employs two people and even I was smart enough to do that.
You and the wife I take it?
Small businesses can take advantage of FX interventions if they have cash on hand that is waiting to be flipped from one currency to another. Most small companies try to maximize their cash velocity however, it doesn't make sense for them to sit on an FX transaction for moths waiting for an intervention that may or may not happen.