Strongly wary of currency intervention, but still rising dollar/yen exchange rate
In Japan, the Prime Minister has made a number of checks and balances statements from the Minister of Finance, and the dollar-yen exchange rate is rising slowly amid strong warnings of intervention. The dollar is rising not only against the yen, but also against many other currencies, including the euro, the pound, the Swiss franc and the Australian dollar.
At the recent FOMC meeting, “Higher for Longer” was assured. If high interest rates continue for the next 1-2 years, the income from interest rates alone during that period will be substantial.
In Japan, in particular, inflation will certainly depreciate the money on hand, even though the Government and the BOJ are very wary of intervention, but neither the Government nor the BOJ will try to protect the yen against this. Depositors’ asset protection is not.
The path to a collapse of the yen is clear. If they intervene, the dollar will fall, but when they do, the yen should be showered with sellers in droves.
The day before yesterday, US interest rates rose sharply, especially for 30-year longs, and as the interest rates are quite high, funds will naturally flock to the US. In Japan, the new NISA is also starting, but with a question mark over Japan’s growth, many people will probably redirect their funds overseas.
The yen dropped from around 149.18 yen to below 148.80 yen in a flash, but it was only a momentary pullback, and once it stabilises, the dollar/yen will return to buying.
I hope intervention will start soon. Intervention will make it easier to buy the dollar/yen. The world is waiting for Japan to intervene. It is only a matter of time before the yen falls. Long dollar-yen will continue.