the Yuan that needs to rise
i don't know much about China, but it sounds like they have a huge amount of debt they haven't dealt with. so, maybe that is a big shoe which drops on them and keeps them from being able to revalue the RMB. i don't know, just an idea.
it seems China wants to have Japan-style mercantilist, export-led economy, but maybe it is not possible. maybe China is too big, relative to the world's customers, for this to work.
Wouldn't you agree that 1995 level was a brief spike, that, when reversed, started a strong weakening leg
i think you're probably right, though it was so long ago my memory was foggy. but the rise in JPY value this time has been, by contrast, slow and steady. but, spike or no, i think JPY has a date with that level and will take it out, sooner or later.
that the rate of change in the JPY against other currencies has been even more painful for Japan.
yes, i was just reading today, AUD/JPY since July down 45%; EUR/JPY down 32%. the scary thing is, USD is relatively unscathed and yet it's well under parity. there are other things, even crazier. for one, there's the won, KRW. KRW/USD is not far off the lows of "IMF" times of the late 90s. i would guess KRW/JPY may have already taken out those lows and is now sitting on a multidecade low vs. JPY. and of course, since Korea is a competitor to Japan in numerous export industries, this will be very painful.
would you agree that dislocation type moves tend to not be repeatable in short periods of time?
yes. but, i think it's also very difficult for us to know when it will stop.
Do you see this Yen move, also, as a repricing move?
i think so, but i also think it will get worse than what we've seen. Murphy's thesis in The Weight of the Yen was that JPY would eventually get so strong that it would BK wide swaths of Japanese industry, and then Japan would have to go through a huge restructuring in order to become competitive again against foreign competition. in this light, it is perfectly understandable, even natural and ultimately for the best, perhaps, that Japan's market undergoes a cr*sh.
i still believe Murphy's thesis was correct...he was just 13 years early. |
