Recently, the exchange rate of the yen, which has always been regarded as a safe-haven currency, has continued to fall. On April 19, the exchange rate of the yen against the US dollar in the Tokyo foreign exchange market fell below the integer mark of 1 US dollar to 128 yen, and once exceeded 129 on the 20th. Continued hit a 20-year low.
As of the evening of April 20, Beijing time, the exchange rate of the yen against the US dollar was still close to 128, continuing to maintain a high level.
In fact, the yen has depreciated continuously since the beginning of this year. In the one and a half months from the beginning of March to the present, the yen has depreciated by more than 10% against the dollar.
While the central banks of the United States, the United Kingdom, and Europe have all begun to tighten their pace or send out tightening signals, the Bank of Japan has maintained an accommodative monetary policy.
Analysis shows that the divergence of monetary policies between Japan and other countries, combined with the recent high oil price deficit and the deterioration of the terms of trade, jointly promoted the rapid depreciation of the yen.
However, analysts believe that the possibility of the US-Japan exchange rate staying near or above 130 for a long time is low.
The yen depreciated by more than 10% against the dollar in one and a half months. The main reason behind the devaluation is the divergence of monetary policies between Japan and other countries
In fact, the depreciation of the yen has been going on for a period of time. It has accelerated since the beginning of March this year. The exchange rate of the yen against the US dollar has rapidly exceeded 129 from around 114 in early March. In just one and a half months, the yen has depreciated by more than 10% against the US dollar. 1 The yen that can be exchanged for the dollar increased by 15 yen.
At the beginning of 2021, the exchange rate of the yen to the US dollar was around 103. In more than a year from the beginning of 2021 to the present, the yen has depreciated by more than 20% against the US dollar.
Not only against the U.S. dollar, but the Japanese yen against other currencies also continued to fall.
On the 19th, the RMB against the Japanese yen broke through the 20 mark, and was still around 19.9 on the 20th.
At the beginning of March this year, the exchange rate of RMB against the yen was still around 18, and the yen depreciated by nearly 10% against the RMB in one and a half months.
If calculated from the beginning of 2021, the depreciation of the yen against the yuan is also more than 20%.
While the yen has depreciated sharply, the US dollar has been in a slump in the recent past.
The U.S. dollar index was temporarily adjusted in early February this year due to the unexpected turn of the European Central Bank and the Bank of England. However, as the Federal Reserve raised interest rates in March and released a signal that it will increase the rate of interest rate hikes and speed up the shrinking of the balance sheet, the U.S. dollar index returned to its gains. , Since April, it has broken through the 99 and 100 mark all the way.
On April 19, the US dollar index stood above 101, and it remained at around 100 as of press time on the 20th.
The signal of the Fed to accelerate the tightening of monetary policy has been relatively clear.
At present, the market expects that the Fed may raise interest rates by 50 basis points at a single meeting in May, and start to shrink its balance sheet in May to curb stubbornly high inflation.
The Fed's current round of balance sheet reduction is significantly ahead of the previous round of tightening cycle, and the simultaneous increase in interest rates and balance sheet reduction may accelerate the recovery of US dollar liquidity.
Yu Lu, an analyst at Societe Generale Research, pointed out that by counting the rise and fall of the US dollar index in the month when the Fed raised interest rates since 1971, it can be found that the US dollar index is more inclined to rise when the interest rate is raised by more than 25 basis points.
While the central banks of the United Kingdom and the United States have begun to accelerate their tightening and the European Central Bank has also remained "hawkish", the Bank of Japan's monetary policy can be described as "unique" and firmly maintains a large-scale easing policy.
On March 18, the Bank of Japan kept the benchmark interest rate and asset purchase unchanged at the interest rate meeting, only reiterating the reduction in the purchase of commercial paper and corporate bonds since April.
Meanwhile, the Bank of Japan has purchased government bonds three times in less than a month.
At the end of March, the Bank of Japan twice proposed to purchase unlimited amounts of 5-10-year government bonds; on April 20, the Bank of Japan announced an unlimited purchase of 10-year government bonds to defend the 0.25% yield ceiling for 10-year Japanese government bonds.
The move also contributed to the depreciation of the yen.
Bank of Japan Governor Haruhiko Kuroda said on Monday that recent moves in the yen were "quite violent" and could hurt companies' business plans, and issued the strongest warning yet about the risks posed by a weaker yen.
However, Kuroda reiterated his view that the Bank of Japan must maintain its massive stimulus program to support a fragile economic recovery.
In addition to the divergence of monetary policies between Japan and other countries, CICC analyst Li Liuyang pointed out that the trade balance deficit and the deterioration of the terms of trade caused by high oil prices may also be the main driver of the recent yen depreciation.
It has tracked high-frequency data and found that Japan's energy import prices have continued to rise recently, with a year-on-year increase of up to 70%. The price elasticity of Japan's energy imports is low. Under the background of high oil prices, the import volume will not appear more obvious. Decrease, because the overall increase in the value of imports has brought about a trade deficit.
The rising import cost of Japanese companies has not yet been transmitted to the consumer side. Experts say that it has little impact on China's exports.
Will the JPY/USD exchange rate exceed 130?
Yu Lu et al. proposed that the top of the yen against the US dollar in this round has not yet been proven, and it may seek a breakthrough after oscillating around 125, with the upper resistance at 130 and 135.
However, it is necessary to be alert to the possibility of marginal tightening of the Bank of Japan's monetary policy. If the Bank of Japan expands the yield range of 10-year long-term bonds, it may trigger a band appreciation of the yen.
Li Liuyang and others believe that before the election of the Japanese Senate, the possibility of the US-Japan exchange rate staying near or above 130 for a long time is low.
If the yen depreciates excessively, it will increase the price of imported goods, thereby reducing the actual purchasing power of households, and ultimately may have a negative impact on the cabinet approval rate. At that time, the political level may bring about a revision of the weak yen and the revision of the Bank of Japan's monetary policy. pressure.
The weak yen in the first half of this year is likely to continue. Its forecast for the exchange rate between the United States and Japan at the end of June 2022 has been raised to 120. It is expected that the exchange rate between the United States and Japan will gradually decline. 117 and 115 respectively.
How does the depreciation of the yen affect Japanese domestic companies?
Li Liuyang and others pointed out that most of the large Japanese companies are exporters, and Japan is a net foreign creditor. The depreciation of the yen is conducive to the profitability of exporting companies and the appreciation of yen-denominated assets.
With the recent rapid depreciation of the yen, Japanese stocks have also outperformed the S&P, Dow and European stocks.
At present, although the inflation pressure in Japan exists, it is far less than that of other developed countries in Europe and the United States. Against this background, there is the possibility that the Japanese authorities will tolerate the rapid depreciation of the yen.
From the perspective of domestic prices in Japan, the cost of enterprises is rising, but it is not fully transmitted to the consumer side.
Data show that in March, the corporate commodity price index (CGPI), which measures the prices of goods and services between companies, rose 9.5% year-on-year, near a record high; the yen-denominated import price index rose 33.4% from a year earlier, indicating that Japan The yuan's recent decline is pushing up import costs for Japanese companies.
Still, Japanese companies have been slow to pass on rising costs to consumers, who have been running below the BOJ's 2 percent target, as weak wage growth weighs on consumption.
The Beijing News Shell Finance reporter interviewed Chinese students studying in Japan and found that the current change in the yen exchange rate has not seriously affected the lives of Japanese residents.
Some international students said that due to the low consumption desire of Japanese local people, many companies have not yet passed on all the increase in raw material prices to consumers, and domestic prices have not shown signs of soaring at present.
For most international students, in the face of a falling yen exchange rate, they may buy foreign exchange and spend more.
"Because the exchange rate has fallen, my living expenses are still from my parents in China, which means that the same RMB can be exchanged for more Japanese yen." An international student said.
Xu Hongcai, deputy director of the Economic Policy Committee of the China Institute for Policy Research, said that Japan's economic resilience and financial system stability are stronger than many emerging economies, and the sharp depreciation of the yen will not have a big impact on the Japanese economy and will not trigger large-scale outbreaks in other countries. In a chain reaction, the sharp depreciation of the yen has little impact on China's exports.
China should pay close attention to the inversion of yields on Chinese and U.S. bonds and its impact, and make a good policy mix to ensure the stable operation of the macro economy.
Beijing News Shell Finance reporter Gu Zhijuan Wang Yuchen editor Yue Caizhou proofreading Yang Xuli