Home Dollar Yen At 150 Per Dollar?

Yen At 150 Per Dollar?

59
8

By Ven Ram, Bloomberg Markets Live commentator and reporter

The global inflation narrative needs to stay on the front burner persistently for the yen to decline toward 150 per dollar, a level not seen in more than three decades. Specifically, five-year inflation-adjusted yield differentials between the dollar and yen need to at least double from around 181 basis points now for Japan’s currency to weaken toward the 150 zip code.

http://www.zerohedge.com/

There are two paths for those spreads to widen: inflation stays stubbornly high in the U.S., forcing the markets to re-price the already-steep Federal Reserve’s policy trajectory; or alternatively, inflation expectations in Japan climb relatively faster and the Bank of Japan chooses to persist with its control of the domestic yield curve.

A widening of both real and nominal rate differentials underpinned the bulk of the 15% slump in the yen so far this year, the worst performance among G-10 currencies.

About 4 percentage points of the decline is explained by second-order or convexity effects, meaning traders are preparing for a scenario where the BOJ’s policy stance and the Fed’s tightening will continue to widen those differentials.

If that narrative stays intact in the months to come, the second-order effects would become even more pronounced, accelerating losses in the yen.

While Governor Haruhiko Kuroda remarked earlier this month that the Japanese central bank doesn’t target the exchange rate, the BOJ subsequently issued a joint statement with the finance ministry vowing to take “appropriate action” should the yen continue to weaken — suggesting the ministry and the central bank may be at odds about their stance on a weaker yen.

In an economy as big and as open as Japan’s, policy makers can’t both aspire to control the yield curve and put a floor under the yen at a time when other global central banks are in the midst of the biggest tightening cycle in years. Even the Swiss National Bank, which long stood shoulder-to-shoulder with the BOJ on policy rates, surprised the markets with an emphatic 50-basis point move last week.

Increasingly, the feeling is that something may have to give in terms of Japan’s policy levers. Among them:

  • There is considerable speculation that the BOJ may have to widen the band within which 10-year bond yields are allowed to move.
  • Under its curve-control policy, the BOJ has a desired trading range for the benchmark of 0.25% either side of zero. A meaningful widening of the band would be positive for the yen
  • The monetary authority could shift its 10-year yield target to a shorter maturity such as the five-year segment.

The yen could also get a reprieve and stave off a decline toward 150 should inflation in the US show signs of a sharp deceleration in the coming months.

All told, the yen — which is now the cheapest it has been in decades based on its real effective exchange rate — is looking for the climactic episode to play out after what has been a mammoth slump since the end of 2020.

8 COMMENTS

    • Making money online more than $15k just by doing simple work from home. I have received $18376 last month. Its an easy and simple job to do and its earnings are much better than regular office job and even a little child can do this and earns money. Everybody must try this job by just use the info on this page…
      🙂 AND GOOD LUCK.:)
      HERE====)> https://www.Richsalary.com

  1. I easily make $32,000-$38,000 each month just by doing a simple home business. This job is online and can be done very easily part-time or full-time, although no specific experience is required for this job. Anyone can join this work now and start earning like me.
    .
    Follow the link. >>>> http://Www.BizPay1.com

  2. I am now making extra $19k or more every month from home by doing very simple and easy job online from home. I have received exactly $20845 last month from this home job. Join now this job and start making extra cash online by follow instruction on the given

    website……….. https://Www.HugePay8.Com

  3. I’ve made so far this year working online and I’m a full time student. I’m using an online business opportunity I heard about and I’ve made such great money. It’s really user friendly and I’m just so happy that I found out about it. Here’s what I do.

    For more details visit………. http://Www.Pays11.Com

    • 𝐈𝐦 𝐦𝐚𝐤𝐢𝐧𝐠 𝐨𝐯𝐞𝐫 $𝟏𝟑𝐤 𝐚 𝐦𝐨𝐧𝐭𝐡 𝐰𝐨𝐫𝐤𝐢𝐧𝐠 𝐩𝐚𝐫𝐭 𝐭𝐢𝐦𝐞. 𝐈 𝐤𝐞𝐩𝐭 𝐡𝐞𝐚𝐫𝐢𝐧𝐠 𝐨𝐭𝐡𝐞𝐫 𝐩𝐞𝐨𝐩𝐥𝐞 𝐭𝐞𝐥𝐥 𝐦𝐞 𝐡𝐨𝐰 𝐦𝐮𝐜𝐡 𝐦𝐨𝐧𝐞𝐲 𝐭𝐡𝐞𝐲 𝐜𝐚𝐧 𝐦𝐚𝐤𝐞 𝐨𝐧𝐥𝐢𝐧𝐞 𝐬𝐨 𝐈 𝐝𝐞𝐜𝐢𝐝𝐞𝐝 𝐭𝐨 𝐥𝐨𝐨𝐤 𝐢𝐧𝐭𝐨 𝐢𝐭. 𝐖𝐞𝐥𝐥, 𝐢𝐭 𝐰𝐚𝐬 𝐚𝐥𝐥 𝐭𝐫𝐮𝐞 𝐚𝐧𝐝 𝐡𝐚𝐬 𝐭𝐨𝐭𝐚𝐥𝐥𝐲 𝐜𝐡𝐚𝐧𝐠𝐞𝐝 𝐦𝐲 𝐥𝐢𝐟𝐞. 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐰𝐡𝐚𝐭 𝐈 𝐝𝐨. 🙂 𝐀𝐍𝐃 𝐆𝐎𝐎𝐃 𝐋𝐔𝐂𝐊.:)

      HERE ➤➤ https://𝐖𝐖𝐖.𝐑𝐈𝐂𝐇𝐉𝐎𝐁𝐙.𝐂𝐎𝐌

  4. I get paid more than $40 to $60 per hour for working online. I heard about this job 3 months ago and after joining this I have earned easily $21000 from this without having online working skills . Simply give it a shot on the accompanying site…

    Here’s what I do………… http://Www.NetCash1.Com

LEAVE A REPLY

Please enter your comment!
Please enter your name here