What's up with the value of the YEN?

[cujojpn]

I already exchanged a good some of my US Dollars for Yen, and will exchange the remainder of my savings into Yen in the next couple weeks.

The Dollar is just in a landslide against the Yen. I suspect it to fall below 80.

[IkemenTommy]

I suspect it to fall below 80.

I doubt it, at least not any time soon. Gradually in the course of months or years... but not over night as that would deeply devastate the fragile J-economy that relies so much on exporting.

[Samurai_Jerk]

I already exchanged a good some of my US Dollars for Yen, and will exchange the remainder of my savings into Yen in the next couple weeks.

The Dollar is just in a landslide against the Yen. I suspect it to fall below 80.

If you think the dollar is going to keep falling, why would you wait?

[FG Lurker]

I doubt it, at least not any time soon. Gradually in the course of months or years... but not over night as that would deeply devastate the fragile J-economy that relies so much on exporting.

I think over the long term the yen will weaken. There are no strong economic fundamentals that make a strong yen logical, and over the long term the market will notice this.

Over the short term though anything is possible. The DPJ is thrashing around and mostly clueless about how to actually govern. Right now Japan is a lot like a junior high school class with a novice substitute teacher.

[cujojpn]

I doubt it, at least not any time soon. Gradually in the course of months or years... but not over night as that would deeply devastate the fragile J-economy that relies so much on exporting.

Oh of course gradually, I would shit bricks if it happened overnight.

[FG Lurker]

I've been pondering reasons why the Japanese government is letting the yen rise as much as they have. <95yen is very painful for any Japan-based manufacturer and will cause long-term harm to the Japanese economy if allowed to continue to rise or stay strong for the longer term.

I can see three possible reasons:

1. The DPJ is absolutely clueless.
2. The DPJ genuinely believes that the strong yen will be beneficial to Japan and that they can remake the Japanese economy into one driven by domestic demand. This is actually very close to #1, come to think of it...
3. The DPJ believes that the yen will weaken next year due to changes in market sentiment, increases in foreign interest rates next year, and/or foreign economies recovering faster than Japan's economy. Waiting until the yen weakens due to market sentiment allows the j-govt to dodge claims of currency manipulation.

I'm definitely hoping for #3 but unfortunately #1 is probably more likely, followed by #2. Guess we will find out over the next 6 months or so.

[Samurai_Jerk]

4. Samurai Jerk gets paid in yen but his debt is in dollars and he has dirt on Hatoyama.

[cujojpn]

I've been pondering reasons why the Japanese government is letting the yen rise as much as they have. <95yen is very painful for any Japan-based manufacturer and will cause long-term harm to the Japanese economy if allowed to continue to rise or stay strong for the longer term.

I can see three possible reasons:

1. The DPJ is absolutely clueless.
2. The DPJ genuinely believes that the strong yen will be beneficial to Japan and that they can remake the Japanese economy into one driven by domestic demand. This is actually very close to #1, come to think of it...
3. The DPJ believes that the yen will weaken next year due to changes in market sentiment, increases in foreign interest rates next year, and/or foreign economies recovering faster than Japan's economy. Waiting until the yen weakens due to market sentiment allows the j-govt to dodge claims of currency manipulation.

I'm definitely hoping for #3 but unfortunately #1 is probably more likely, followed by #2. Guess we will find out over the next 6 months or so.

Either-way, it kills us FG's who are entering Japan for the first time and exchange my dollars for 20 rate cut of what they should be compared to the Yen.

[FG Lurker]

Either-way, it kills us FG's who are entering Japan for the first time and exchange my dollars for 20 rate cut of what they should be compared to the Yen.

Sure, but if you are moving here to work and earning money in yen then you will rapidly recover any loss once you start converting earned JPY to US$.

It really kills someone like me with an export business with product priced in US$. The yen has risen 36 full points from its weakest a couple of years ago. Admittedly 124yen/dollar was too extreme in the opposite direction from where it is now, it would be nice to have a happy (and stable!) medium between 100 and 110...

[AlbertSiegel]

This exchange rate really stinks. I am holding off on any trip to Tokyo partly due to the bad rate. I'm on a bit of a budget, earn USD, and would stay for a few weeks. I simply cannot do it with the rate at what it is. I miss the days when 110-115 were the norm.

[nottu]

[omae mona]

The exchange rate stinks but so does the economy which more than makes up for it. Air fares, hotel rooms, restaurants - there is still a lot that is relatively cheap. Japan is still a good deal. If you wait for the return of the 115Yen/USD, you might also see hotel room prices that are 30% higher.

I think nottu has a good point. I am seeing quite a lot of discounts and sales (e.g. beer in restaurants knocked down from 550 yen to 280 yen, video rentals that have gone from 400 yen to 250 yen) which seem to continue for month after month. I haven't been following hotel prices here, so I have to defer to nottu on that, but food and entertainment seem to have come down a bit. Not sure if it makes up for the exchange rate move, but it certainly lessens the effect.

[nottu]

[Greji]

[nottu]

[Greji]

Bullshit - look at the long legs on those babes - that's a Wisconsin herd.
Goats have been a controlled substance in Japan since 1987.
Isn't that when you got your PR?

I have to apologize. Only a true connoisseur would recognize those beauties as Packers. I've only been able to smuggle a few of them into country. But they're for Medicinal use only..

[FG Lurker]

I've only been able to smuggle a few of them into country. But they're for Medicinal use only..

"You must spread some Reputation around before giving it to Greji again."

[Cyka UchuuJin]

I think nottu has a good point. I am seeing quite a lot of discounts and sales (e.g. beer in restaurants knocked down from 550 yen to 280 yen, video rentals that have gone from 400 yen to 250 yen) which seem to continue for month after month. I haven't been following hotel prices here, so I have to defer to nottu on that, but food and entertainment seem to have come down a bit. Not sure if it makes up for the exchange rate move, but it certainly lessens the effect.

the discounts and lower prices in restaurants and video shops is another 'japan for the japanese' (or the FGs who know the system)

our stay in the park hyatt this week is the same price as it's been for the last 3 years. out of curiousity we did a bit of internet shopping on the other hotels...all same prices as they were a year ago. seems to be a case of that fantastic yokoso! mentality...they don't know how much anything costs here, and they'll come anyway.

[Samurai_Jerk]

the discounts and lower prices in restaurants and video shops is another 'japan for the japanese' (or the FGs who know the system)

I'm not quite sure what you mean. About the only thing that would stop a foreigner from knowing about these deals is lack of Japanese ability. But that would be true in any country that you don't speak the language, wouldn't it?

[Cyka UchuuJin]

I'm not quite sure what you mean. About the only thing that would stop a foreigner from knowing about these deals is lack of Japanese ability. But that would be true in any country that you don't speak the language, wouldn't it?

sorry, been a long week. what i meant is that you would think that a country who wants to attract more tourists would drop hotel and other tourist attraction rates.

[omae mona]

sorry, been a long week. what i meant is that you would think that a country who wants to attract more tourists would drop hotel and other tourist attraction rates.

I think the replies were mainly directed at AlbertSiegel, who asked the question, and is an old hand here. I am pretty sure he is a guy who knows how to find a cheap beer, even if he doesn't live here full time.

But Cyka, to your point, obviously there is not much the country can do per se to lower private hotel rates. That being said, I am baffled as to why/how the high end foreign-owned Tokyo hotels have maintained their rates despite the flood of new entries to the market (Mandarin Oriental, Peninsula, Ritz, etc.) over the last 2-3 years. Who the heck is coming to Japan nowadays (besides you) and filling up these hotel rooms?

[nottu]

[Kuang_Grade]

I poked around my usual haunts and for the most part the prices seem to be within 10% of what I would normally expect, although I haven't spent time in Tokyo in Nov so I don't know if there is some specific seasonality in rates that I may not be aware of. In my poking around, it seems more than a few are more empty than I previously remember them. The Tokyu Cerulean looks a bit cheaper than I remember but only by 3000-4000 yen or so...but the Cerulean is a bit of an odd fish...its not super lux enough to stand its own merits and it is far away from the train station/shibuya crossing in general not be everyone's first pick, although it does have some nice views due to its height.

On the high end, the super lux hotels are unlikely to lower price regardless of how bad business is due to branding issues as well as keeping out what they would see as riff raff....They will fiddle with increased levels of rewards for loyalty programs and/or bonus items like free meals/spa visits/nights/etc to get more guests but they are unlikely to fiddle much with prices, since they really don't view themselves as simple commodities but rather experiences which happen to have high prices attached to them.

The middle and low end hotels are far less likely to target FGs with much effort at all, or if they do, the larger chains are likely to do so through bulk deals to 3rd parties and let those agencies sell to FGs rather than the hotel doing itself....This is how I imagine the Prince hotel chain attempts to keep that massive hotel in Shinagawa filled.

I would imagine that most hotel chains view FGs as relatively price inelastic (per each subgroup, be they backpackers or business men, for their respective 'normal' price/service expectations) given that hotel expenses likely rank only 3rd or 4th in the things that travelers would consider when debating about a making a trip to Japan or not. Similarly, outside a few hotels with western brands, I doubt that FG spending is really large enough to move the needle much. Sure they love to get that business if they can but they aren't going to spend a lot of effort chasing it....it is much more easy for them to come up with some spa/dining/shopping promotion targeted at J women.

[Mulboyne]

The casual overseas visitor isn't getting much of a discount at the top hotels but you can find deals at some of the serviced apartment complexes. Usually their minimum contract is 30 days but, as Gomi Girl has found out, some will do shorter stays which works out quite well against a hotel rate. Top hotels are doing deeper discounts to corporate clients. If you can find someone who will make a booking at a corporate rate for you then you'll see a lot of major hotels charge 16-25,000 yen for 30-45,000 yen rooms. I used to have someone who could get a reasonable international hotel for 11,000 yen a night. When a pound was worth nearly 250 yen, that translated into one of the best deals in the developed world. Even at 140 yen to the pound, it isn't too shabby but, stupidly, I lost contact with the "fixer".

[FG Lurker]

Japan faces risk of ratings downgrade over debt
Reuters, November 10, 2009

Fitch Ratings warned Japan on Tuesday to keep to its borrowing target or risk a credit rating downgrade as the finance minister acknowledged the problem and tried to reassure rattled investors by saying spending had to be cut.

Japanese sovereign credit default swaps spreads have nearly doubled in the past week as investors fretted that the government faces a funding crunch over its ballooning public debt, which the International Monetary Fund says will spiral to 227 percent of gross domestic product next year, by far the worst in the G7.

[...]

The government has said it plans to borrow 44 trillion yen ($490 billion) in the 2010/11 fiscal year starting next April, which would be on top of expected record issuance this fiscal year of more than 50 trillion yen.

But Fitch Ratings said it's hard to see how the 2010/11 goal will be achieved and borrowing much more than 44 trillion yen would spark a ratings review.

"To be frank, at this point it is quite hard to see how they are going to maintain the 44 trillion yen," David Riley, co-head of global sovereign ratings at Fitch, told Reuters Television in an interview.

"It's not the sole determinant that will drive our assessment but other things being equal, then I think that would prompt us to review Japan's current double AA-minus rating."

(Full Story)

227% isn't just the worst of the G7, it's the worst of any country in the world with a functioning economy!

A downgrade would certainly be a big embarrassment for Japan, it's difficult to say exactly how much it would effect the value of the yen though.

[james]

227% isn't just the worst of the G7, it's the worst of any country in the world with a functioning economy!

or even some countries without one.. glad to see japan edge out zimbabwe for top spot though.

[FG Lurker]

Nissan Says Strong Yen 'Risk' to Japan's Auto Output
Bloomberg, November 11, 2009

Nissan Motor Co.'s automobile production in Japan will face a "huge risk" if the yen rises further, Chief Operating Officer Toshiyuki Shiga said.

There is a "sense of concern" that the appreciating currency is making the manufacture of cars in Japan less viable, Shiga told reporters in Tochigi, Japan today. His comments add to those from the country's other carmakers, who have lost U.S. market share to Korea's Hyundai Motor Co. after the yen strengthened to a 14-year high in January.

Toyota Motor Corp. Executive Vice President Takeshi Uchiyamada said last month the company must "think about producing overseas what is now being produced in Japan." Nissan, Japan's No. 3 automaker, will fully use its production capacity in the U.S. and Mexico in the "very short term," Nissan Chief Executive Officer Carlos Ghosn said at last month's Tokyo Motor Show.

(Full Story)

Not at all unexpected, but the strong yen is going to totally fuck up Japan's manufacturing base if this continues for too much longer.

[james]

[Mulboyne]

[Buraku]

[quote="FG Lurker"]I think over the long term the yen will weaken. There are no strong economic fundamentals that make a strong yen logical, and over the long term the market will notice this.

Over the short term though anything is possible. The DPJ is thrashing around and mostly clueless about how to actually govern. Right now Japan is a lot like a junior high school class with a novice substitute teacher. ]

Yeah maybe there are lots of pointers to long term weakness but as it gains strength in the short term I might suggest shifting a small percentage of those savings back into commodities. The only problem with commodities is that you would be arriving late in the game and gold has hit all time highs

If you feel like you are getting fucked up the ass
Don't worry the old-timers will confirm it happens to everyone