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Does this mean folks should be buying ¥?? The Japan economy fundamentals are strong, right? So the JPY ought to go back up?

refurb 4y ago
Japan economic fundamentals are not strong. The government has basically been propping up the economy with free money. Now that free money is driving inflation which is another problem. Expect a major reset at some point. That's like catching a falling knife when it comes to bets on exchange rates.
- zztop44 4y ago
  I don’t think it’s the free money driving inflation, right? It’s impossible to know for sure, but I’d say it’s not likely the driving force is the weak yen. Which is caused by having 0% interest rates in a world where US interest rates are no longer also zero.
- themaninthedark 4y ago
  > The government has basically been propping up the economy with free money. Now that free money is driving inflation which is another problem. That sounds very familiar....
  - refurb 4y ago
    Wait until you see how far Japan went. They own most of the equity of the large industries
arc-in-space 4y ago
Not at all, if anything the BoJ promises to maintain 2% inflation, the strength of their economy isn't even particularly relevant. Its drop in value may have overshot, so it might retreat up a little, but in general I wouldn't expect it to gain much at this point. (Plus, be careful of confusing movements in the yen's exchange rate with a change in value of the USD.)
somenameforme 4y ago
I always use Japan as a response to the ever-present suggestion that what goes down must come back up as it relates to economies and markets. This [1] is a graph of the Nikkei 225 (effectively the Japanese market) dating back to 1949. Keep in mind the scale - that's a logarithmic graph. They were the second largest economy in the world in 1989, with many expecting them to imminently surpass even the United States. [1] - https://www.macrotrends.net/2593/nikkei-225-index-historical-chart-data https://www.macrotrends.net/2593/nikkei-225-index-historical...
- frankchn 4y ago
  That chart doesn't include dividends right? I think it will look slightly better if you include dividend reinvestment.
dementis 4y ago
The old adage is to buy low and sell high. https://asia.nikkei.com/Business/Markets/Currencies/Yen-surges-to-six-week-high-on-signs-of-easing-U.S.-inflation https://asia.nikkei.com/Business/Markets/Currencies/Yen-surg...
largepeepee 4y ago
Are you planning to go from losing money in crypto to losing money in fx? Because you are suggesting the classic BoJ widow maker trade, which has killed many a trader. But who knows maybe you'll be the foolish but lucky one.
- Danieru 4y ago
  Widow trade is the opposite. OP is saying sell non yen to buy yen. Widow trade is to short japanese government bonds. That in fact has nothing direct to do with forex. The widow trade is a bet that interest rates will be risen.
  - largepeepee 4y ago
    Oh I am familiar with the trade and op IS doing the same bet as the widow maker fx trade on a smaller scale without derivatives. Think abt it, he is suggesting buying currency in hopes that it will appreciate. Same bet, different method to get there.
rjh29 4y ago
If it was guaranteed to rise, people would be buying it and the price would have risen. The current price reflects a level of risk that their economy will not recover!

refurb 4y ago

Japan economic fundamentals are not strong. The government has basically been propping up the economy with free money. Now that free money is driving inflation which is another problem. Expect a major reset at some point. That's like catching a falling knife when it comes to bets on exchange rates.

zztop44 4y ago
I don’t think it’s the free money driving inflation, right? It’s impossible to know for sure, but I’d say it’s not likely the driving force is the weak yen. Which is caused by having 0% interest rates in a world where US interest rates are no longer also zero.
themaninthedark 4y ago
> The government has basically been propping up the economy with free money. Now that free money is driving inflation which is another problem. That sounds very familiar....
- refurb 4y ago
  Wait until you see how far Japan went. They own most of the equity of the large industries

arc-in-space 4y ago

Not at all, if anything the BoJ promises to maintain 2% inflation, the strength of their economy isn't even particularly relevant. Its drop in value may have overshot, so it might retreat up a little, but in general I wouldn't expect it to gain much at this point. (Plus, be careful of confusing movements in the yen's exchange rate with a change in value of the USD.)

somenameforme 4y ago

I always use Japan as a response to the ever-present suggestion that what goes down must come back up as it relates to economies and markets. This [1] is a graph of the Nikkei 225 (effectively the Japanese market) dating back to 1949. Keep in mind the scale - that's a logarithmic graph. They were the second largest economy in the world in 1989, with many expecting them to imminently surpass even the United States. [1] - https://www.macrotrends.net/2593/nikkei-225-index-historical-chart-data https://www.macrotrends.net/2593/nikkei-225-index-historical...

frankchn 4y ago
That chart doesn't include dividends right? I think it will look slightly better if you include dividend reinvestment.

dementis 4y ago

The old adage is to buy low and sell high. https://asia.nikkei.com/Business/Markets/Currencies/Yen-surges-to-six-week-high-on-signs-of-easing-U.S.-inflation https://asia.nikkei.com/Business/Markets/Currencies/Yen-surg...

largepeepee 4y ago

Are you planning to go from losing money in crypto to losing money in fx? Because you are suggesting the classic BoJ widow maker trade, which has killed many a trader. But who knows maybe you'll be the foolish but lucky one.

Danieru 4y ago
Widow trade is the opposite. OP is saying sell non yen to buy yen. Widow trade is to short japanese government bonds. That in fact has nothing direct to do with forex. The widow trade is a bet that interest rates will be risen.
- largepeepee 4y ago
  Oh I am familiar with the trade and op IS doing the same bet as the widow maker fx trade on a smaller scale without derivatives. Think abt it, he is suggesting buying currency in hopes that it will appreciate. Same bet, different method to get there.

rjh29 4y ago

If it was guaranteed to rise, people would be buying it and the price would have risen. The current price reflects a level of risk that their economy will not recover!