SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Asia Forum
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Sam who wrote (9231)9/3/1999 6:22:00 PM
From: Hawkmoon   of 9980
 
A thought for the thread about the strength of the yen.

Here's the scenario:

The yen is strong. In fact, so strong that it threatens to disrupt their economic recovery and certainly stronger than is merited by the enormous debt held by their severely strapped financial sector. I opine that it is hard to proclaim an economic revival in Japan under the weight of this debt.

The BOJ has ceased intervening because they know the US won't cooperate since it's not our policy to do so unless things get outta hand, and since a lower dollar reduces the trade deficit. The BOJ doesn't have the wherewithal to fight off the hedge funds and FOREX traders by itself, except for brief periods, after which they speculators come right back in greater strength.

Now my scenario is that there has been no intervention since the BOJ has opted to let the speculators have their day in the sun on the upside, as well as creating the circumstances whereupon the Yen becomes so grossly overvalued that the speculators will then reverse course and short the yen from a far safer entry point, thus mitigating their risk from entering into those risky Yen/Dollar carry trades. (or bringing home their yen from the US and preparing to reconvert them back into dollars once they are ready to monetize their national debt which is per capita greater than the US debt).

Allowing the Yen to climb so high against the dollar creates that extra buffer for the speculators to enter into these trades and take some of the pressure off the BOJ.

On the other hand, or in combination with, it also permits the Japanese govt the opportunity to monetize their debt into strength in the yen.

Any comments on my theories?

Regards,

Ron
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News