What's up with the value of the YEN?

[Russell]

and at 79 to the USD again...

That's because China has been heavily buying Yen instead of US$ in recent months:
http://www.businessweek.com/news/2011-06-07/china-s-net-purchases-of-japan-long-term-debt-reach-record.html

[FG Lurker]

That's because China has been heavily buying Yen instead of US$ in recent months:
http://www.businessweek.com/news/2011-06-07/china-s-net-purchases-of-japan-long-term-debt-reach-record.html

Uhh, no.

$16 billion dollars in bond purchases over the period of a month will have no perceptible impact on the exchange rate. Over US$2 trillion is traded in FX on a daily basis and something over 15% of that is USDJPY. That averages out to around $6 trillion per month traded between the USD and JPY.

The yen has gained in recent days because of concerns over the European debt situation combined a lot of bad economic news coming from the US.

[Russell]

So, who's been buying Yen for Dollars then?

[ChargerCarl]

combined a lot of bad economic news coming from the US.

Just curious what exactly this is.

[Coligny]

Originally Posted by FG Lurker
combined a lot of bad economic news coming from the US.

Just curious what exactly this is.

Bin Laden has been killed...

Try to ask for a war budget when you just vaporised the official target...

[ChargerCarl]

[FG Lurker]

So, who's been buying Yen for Dollars then?

Worldwide yearly GDP is about US$58 trillion. Yearly FX trading is over US$500 trillion. Speculation drives the FX markets (and the commodity markets) which is why seemingly insignificant news events can move markets so quickly.

[FG Lurker]

Just curious what exactly this is.

It matters not if you or I think the news is good, bad, getting better, getting worse, or just the same BS as always. When a few large hedge fund managers (or other huge speculators) interpret the news as being good or bad the markets move, and often very quickly.

[nottu]

[cstaylor]

You mean Ben and Timmy have nothing to do with it?

No, they just get left holding the bag...

[FG Lurker]

You mean Ben and Timmy have nothing to do with it?

They create (directly or indirectly) a lot of the market-moving news on the US side of things and have pumped a few trillion dollars into the economy to keep things moving. Certainly a trillion dollars is a fuckload of money but compared to the world's GDP and especially compared to the volume of speculation in FX, commodities, stocks, and derivatives a few trillion doesn't go very far.

[nottu]

[tone]

any new indications from you market watching types? its been holding steady at 80 since last damn october

[tone]

its going in the fawking wrong direction

[2triky]

Japan's 'Mr. Yen' Sees Currency Rising to 75 or 76 Per Dollar

July 27 (Bloomberg) -- Japan's yen may strengthen to as high as 75 per dollar, a former top Finance Ministry official said as policymakers voiced increased concern about the threat the strengthening currency poses on the nation's economy.

The yen "is going to hold in the 70's range and it could even go as far as 75 to 76 yen per dollar," Eisuke Sakakibara, who directed exchange-rate policy at the Ministry of Finance between 1997 and 1999 and is currently a professor at Aoyama Gakuin University, said at a forum in Tokyo today. He didn't specify a timeframe for the forecast.

A Bank of Japan board member earlier today signaled the central bank was prepared to "proactively" take policy action should the yen's advance threaten growth as the currency advanced to a four-month high against the dollar. The gains risk eroding the profits of exporters, a key driver of growth, at a time when the economy is recovering from a record earthquake.

"We are at a critical point," in determining the impact of the yen's gain on the economy and whether the strengthening will become a trend or is temporary, BOJ board member Hidetoshi Kamezaki, said at a press conference today in Mie, central Japan.

Japan's currency rose to 77.58 against the dollar today, the highest since March 17, on concern lawmakers would fail to reach an agreement on a plan to raise the U.S. debt ceiling needed to prevent default.

Sakakibara's comments echoed his June 14 call for the yen to rise to 75 to 80 in the "not too distant future." He became known as "Mr. Yen" during his tenure at the Finance Ministry because of his efforts to influence the yen rate through verbal and actual intervention in currency markets.

Weigh on Recovery

Finance Minister Yoshihiko Noda told reporters today he was monitoring markets closely, reiterated daily remarks he has made in the past week. BOJ Governor Masaaki Shirakawa also said this week that the yen could weigh on an economy recovering from a record earthquake.

The Japanese currency's strengthening past 80 yen to the dollar is slowing the nation's economic recovery, Toyota Motor Corp. President Akio Toyoda said on July 19. Nissan Motor Co.'s Chief Executive Officer Carlos Ghosn said on July 16 that "the high yen is definitely a headwind."

"The yen's gains could have a negative effect on the economy," said Kamezaki, a former executive of Mitsubishi Corp., a general trading company. "We shouldn't rule out any policy options," he said, adding there was no need for the central bank to ease policy further now.

Currency Intervention

Kamezaki said currency intervention by the Finance Ministry could be effective in combating volatile moves in the foreign- exchange market. The government hasn't sold yen since March, when it stepped in with its Group of Seven counterparts to curb gains in the yen. The central bank conducts intervention at the behest of the Finance Ministry.

Exports had only just shown signs of rebounding from the power and supply constraints resulting from the March earthquake. Overseas shipments fell 1.6 percent in June, the smallest drop since the temblor.

Kamezaki said the U.S. debt ceiling and European sovereign debt problems are affecting currencies. A credit-rating downgrade and a default in U.S. sovereign debt could be "a major problem" for Japan's financial markets, he said.

Shirakawa said in a speech this week that a stronger currency could hurt corporate sentiment and warranted "careful monitoring." The BOJ left the benchmark lending rate between zero and 0.1 percent at a meeting earlier this month. The board will next meet on Aug. 4-5.

Source

[AlbertSiegel]

it's at 76 now... I wonder what will happen on Tuesday if the U.S. can't figure out a solution to its debt issue.

[Ketou]

it's at 76 now... I wonder what will happen on Tuesday if the U.S. can't figure out a solution to its debt issue.

One thing is for certain. You can't fix debt problems by borrowing more money...

[FG Lurker]

One thing is for certain. You can't fix debt problems by borrowing more money...

Can't fix debt problems if everything completely grinds to a halt either.

If the US stops spending money on 2.5 wars and lets the Bush tax cuts expire that would take care of a good chunk of the deficit. Put taxes back to Reagan levels and there will be a nice surplus.

[Russell]

Can't fix debt problems if everything completely grinds to a halt either.

If the US stops spending money on 2.5 wars and lets the Bush tax cuts expire that would take care of a good chunk of the deficit. Put taxes back to Reagan levels and there will be a nice surplus.

That is very true, but since Reagan, politics in the US has radicalized, so all of the solutions you mention seem to be unacceptable. Now we can only wait for the US$ to become 50 Yen...

[FG Lurker]

That is very true, but since Reagan, politics in the US has radicalized, so all of the solutions you mention seem to be unacceptable.

My feelings are that the Republicans are going to get their asses very badly kicked in 2012 and we will see things get done after that. That's why Obama wants the debt ceiling raised enough to last through until the end of 2012.

Now we can only wait for the US$ to become 50 Yen...

If the US Congress can't get their shit together then the world should stop using the US$ as a reserve & trading currency. Price oil and other commodities based on a basket of currencies and tell the US to go fuck themselves. The world should not be held hostage by a few imbeciles elected by even greater imbeciles (aka teabaggers & religious fuckwits.) Let the US implode and sink as said imbeciles seem determined force happen. /rant

[Russell]

My feelings are that the Republicans are going to get their asses very badly kicked in 2012 and we will see things get done after that. That's why Obama wants the debt ceiling raised enough to last through until the end of 2012.

The Republicans tried the same with Clinton, with disastrous results for them. Compared to then, however, the dynamics now are very different, with a President that has not lived up to his promises, and an economy in the doldrums. Still the Repubs may get their asses kicked if they continue to come up with fruitcakes like Palin, Bachman, Gingrich, and Romney as candidates for 2012. But then again, TIA...
I can only hope that a candidate of a third party will get a serious chance this time.

If the US Congress can't get their shit together then the world should stop using the US$ as a reserve & trading currency. Price oil and other commodities based on a basket of currencies and tell the US to go fuck themselves. The world should not be held hostage by a few imbeciles elected by even greater imbeciles (ie teabaggers & religious fucktards.) Let the US implode and sink as they seem determined force happen. /rant

There is already a trend away from the US$ as the reserve & trading currency. Saddam Hussein was one of the first to initiate it, with unfavorable results for him. There are proposals of nations to do their trade in their own currencies, but this is still minor. Most Pro-US Arab regimes will continue to support the US$, as long as they are in power. Japan will also be a reliable supporter of the US$, as long as it is in its financial power. The wild card is the Chinese...

I remember that you pointed out in a previous post that the currency flows due to nations' trades are relatively small as compared to the total currency trade. However, currency traders (and hedge fund managers) are not insensitive to these flows, so their reactions may amplify them.

The worst case scenario will be when there are very sudden movements away from the US$, due to some big parties being forced to sell. It will not only severely affect the US, but also the rest of the world, according to some economists. I guess they mean that the interest rate for US govt debt will go up, increasing the chances of an eventual default. If the US default, they will drag down all those that bought their bonds. That's when the real financial crisis starts.

[Samurai_Jerk]

The world should not be held hostage by a few imbeciles elected by even greater imbeciles (aka teabaggers & religious fuckwits.)

It's amazing just how stupid and ignorant they've become and how proud they are of their stupidity and ignorance.

[FG Lurker]

It's amazing just how stupid and ignorant they've become and how proud they are of their stupidity and ignorance.

It's damn scary. I'm hoping these freaks will scare enough normal people into voting in he next election, much like Bush's policies did in 2008.

[Ketou]

Can't fix debt problems if everything completely grinds to a halt either.

If the US stops spending money on 2.5 wars and lets the Bush tax cuts expire that would take care of a good chunk of the deficit. Put taxes back to Reagan levels and there will be a nice surplus.

Don't see why anything would grind to a halt.

The US does need to start living within it's means. Stopping the wars, including the one on drugs, would definitely help things.

The media portray the debt talks a crisis, it's really nothing more than someone saying I'm not going to borrow any more money. When the creditors start saying they are not going to lend anymore money is when we'll see the crisis. In 2012 when interest rates start to hike is when the fun will begin.

[nikoneko]

Can't fix debt problems if everything completely grinds to a halt either.

If the US stops spending money on 2.5 wars and lets the Bush tax cuts expire that would take care of a good chunk of the deficit. Put taxes back to Reagan levels and there will be a nice surplus.

Apparently I can't do the spread reputation thing around but FG Lurker, Russell, and Samurai Jerk right the f on. I always use my farm raised mom as a barometer of politics in the US and if I remember right her last statement was something like 'I saw this guy Boehner's follow up speech and I it just made me sick. These guys just want to use this to make it for themselves and they are killing us.' ...

[damn name]

I find it very hard to be optimistic. The US has painted itself into a corner. It'll use the same tools they always use, more wars and more dollar printing. The US will gin up the propaganda machine to attack Iran and hopefully (in their minds) create a wider, bigger war in the area.

The military industry lobbyists have Washington in a headlock and they'll do anything, short of nothing, to keep the tax money flowing to themselves.

[IparryU]

in the US many companies/wealthy individuals are paying off their debts to clean up their books. Where as in this time we need those with money to spend it and put it back into the economy. Right now the mid-class and below are doing nothing but saving their money in the bank, trying to sell off assets for cash when there are no buyers, etc.

If banks are giving off loans with low interest rates (need to check if that is the case now) it is a sign that they want people to borrow money that is doing nothing towards the economy and spend it. This would obviously put the US$ back into the economy, but it is also a burden on the borrower to pay off in the future and at this point of time, everyone thinks that it will be impossible to pay off, hence the reflectance to do so.

When Japan was building roads and bridges to no where, that was the govt. taking many loans and spending money, thus giving people jobs, and money in their pocket. Same for the earthquake, tsunami, and radiation leak... it is loans being pushed, spent, jobs + money, and the JPY being pushed back in to the flow.

If the USA had something large scale to spend money on, e.g. putting half built malls, buildings, etc. back in the "build" stage, it would give jobs for various areas of manual labor, then afterwards employees for the building itself, etc. but that would only help out town by town to where they do it in.

Now if they were to start implemting a new public transportation system, eg trains (which there are slim to none of) that would be work from the west to the east, and then some.

but someone has to have the balls to take out a loan that big and not from another country... it all has to be done inside the USA to make it work... not taking loans from China so to speak.

sounds far fetched and "not going to happen", but if done, US money will be used and put back in to the economy.

EDIT: not to mention the JPY:USD to switch back around even though for us Yanks earning in JPY love going back home with the FX on our side. I went back last month and was having fun with JPY40,000 ... the rate was at 75~76 IIR

[tone]

im in a japanese class with a chinese born econ major who thinks the FX will even back out in a few yrs - but that the US wants a cheap dollar right now to help exports

its brutal for me - when i took money home in 2003 it was 130 - now when i have USD its about as bad for USD>JPY as it has been in yrs

[matsuki]

its brutal for me - when i took money home in 2003 it was 130 - now when i have USD its about as bad for USD>JPY as it has been in yrs

Tell me about it...my recent court settlement was paid out in USD recently....but the original order was paid from Yen->USD->manufacturer back when the yen was still at around 90~100

[2triky]

Don't see why anything would grind to a halt.
The media portray the debt talks a crisis, it's really nothing more than someone saying I'm not going to borrow any more money. When the creditors start saying they are not going to lend anymore money is when we'll see the crisis. In 2012 when interest rates start to hike is when the fun will begin.

It was a completely manufactured crisis that need not have even happened let alone averted.