USD v. JPY
 

Has anyone else looked with alarm at the USD's dive in the last three days against the Yen? It is down to 112.6 this afternoon. It was as high as 123 last month and 118 just three days ago. I know no one can forecast the future but I sure wish I had seen this coming and had transferred money from USD to Yen earlier this week for September rent. :(

Anyone with professional insight that might give a short term prognostication?

Marc

Alarm? No, I'm looking at it with unbridled joy. I'm long yen, and the profit pool at the end of the year is based on the leftover in USD not in JPY, so over the last two weeks, our profit pool went up 30% (10% appreciation and 30% gross margin) without lifting a finger.

I was under the impression that the JPY was undervalued at the 123 range. Considering that most other currencies have been strong against the greenback of late. The USD is weak and this is reflected in the recent rate (also the loan/liquidity problems, not to mention the ongoing stock market correction). In the past 17 years the USD has been in the low range of 78+- Yen all the way to140+- Yen.

The yen has started to firm up against the pound, good thing too! It's bad enough that my circumstances are draining the Japanese coffers, a strong pound against a weak yen has really been putting the boot in.

For those of us that get paid in yen, it's wonderful.

Alarm and perhaps surprise at the extent and speed of the drop, but not surprised that the market realized 123:1 was undervalued.

I'm far from a professional in the field. But such a fast swing in the yen in particular could have resulted from two causes I can think of: 1) BoJ suddenly deciding to stop buying dollars as a reserve currency (doubtful); 2) large unwinding of the carry trade whereby hedgies and others borrow in yen at low interest rates and invest in relatively high-interest-rate economies that have sufficient liquidity, such as New Zealand. The carry trade has been blamed for depressing the yen and pumping up the NZ$, among other currencies. If those currencies are moving too (in the opposite direction), it's likely the carry trade unwinding.

Or there could be a completely different reason.

I'm sure when the dust settles, the explanations will come to light. We haven't heard the last of this, for sure.

And as one paid in dollars planning to spend yen later this year, yeeeeaaaahhhh, not real happy with the news.

Transfer now. My opinion is that it will hit 110 by next Friday.

Please bear in mind that I am not Alan Greenspan, nor do I play him on teribi.

well, the fed just cut interest rates, so who knows if the swing will start to trade back the other way. but in any event, it's times like these that i like being paid in the local currency. just makes things a lot easier.

Its interesting how we all have such different perspectives based on how we are paid and how we pay our expenses. This couldn't have come at a worse, or better, time for me as my COLA is adjusted based on the exchange rate on the third Friday of the month. Unfortunately, it is going to really depend on whether they use Friday Tokyo time (based on 114 Yen per USD) or Friday EDT (based on 111 Yen per USD). If they use the latter, I think I will come out ok even if the USD drops to 110 or below in the future. My problem is that I let my Yen account get too low wherein I didn't have the flexibility to "wait out" a short term downturn.

Thanks for all the insight.

Marc

I'm no mathastataeconomy guy, but I've seen worse in the past.

Agreed, but you're likely to see it worse again IMHO.

I don't want to turn this thread into an OMNuts discussion so I'll table the issue unless someone cares for a mabo-Roti "experts panel". :cool:

Wasn't it the Japanese who were the major financers of the U.S. deficits until China took on that role? At any rate in the mid-early '80s, the JPY was worth some 220-240 per USD in the '80s. Following some U.S. pressure to revalue, the JPY drifted up to the JPY 150-160 range by late 1985 through '86.

Given relative costs in the two countries, my view is that Japan is fairly priced against the U.S. for a short term visitor at around Y110=$1.

Ahhh! Don't jinx me. I am already crying over the lost 128:1 that I saw a month ago. I'll have to buy some in the next month or so and 110:1 will just break my heart - among other things.

JR

I agree.

All the price comparisons I've made in the past year are based on a
200yen to £1 exchange rate
and a
100yen to a $1 exchange rate

Even though it's been 230yen to a £1 for a while now. This has forced me into thinking of things as being more expensive than they are and I believe the costs are still very reasonable for visitors even with this less than favourable fabricated exchange rate.