"The third in the world" hangs? The yen continues to depreciate rapidly, and Japan has made a move on the foreign exchange market after a lapse of 24 years
[Global Times correspondent in Japan Yue Linwei, Global Times reporter Pan Xiaotong and Song Yi] The continuous and rapid depreciation of the yen has made the Japanese government and the Bank of Japan, which have been "holding back" before, unable to sit still.
On the 21st local time, the Federal Reserve announced a sharp increase of 75 basis points in interest rates.
On the 22nd, the exchange rate of the yen against the US dollar fell rapidly to the 145 range, forcing Japan to intervene in the foreign exchange market after a lapse of 24 years.
Since the beginning of this year, the continued depreciation of the yen has made Japan's gross domestic product (GDP) denominated in US dollars likely to fall below US$4 trillion for the first time in 30 years, causing Japan to lose its position as the world's third-largest economy.
After a lapse of 24 years, Japan took a shot at the foreign exchange market
According to the "Nihon Keizai Shimbun" report, the Japanese government and the Bank of Japan announced on the 22nd that they would intervene in the foreign exchange market by buying yen and selling dollars.
This is the first time the Japanese government has intervened in the foreign exchange market since June 1998.
Affected by this, the exchange rate of the yen against the US dollar strengthened, once rising to the 141 range.
Japanese Finance Minister Kanda Masato told the media that day: "Excessive and disorderly fluctuations in the exchange rate cannot be tolerated." Japanese Finance Minister Suzuki Shunichi previously told the media that the Japanese government is highly concerned about foreign exchange market trends, and if the trend of yen depreciation continues Going forward, we will not rule out any option to take necessary countermeasures in the foreign exchange market.
The last time Japan intervened to sell dollars to buy yen was in June 1998 at the height of the Asian currency crisis, and the last time it entered the market to sell yen was in November 2011.
Earlier, the Bank of Japan announced at the end of the day's monetary policy meeting that it would keep the policy rate unchanged at -0.1% and maintain the 10-year Japanese government bond yield target at around 0%.
Japan is currently the last major economy with a central bank still in negative interest rate territory.
As the Federal Reserve has just announced a sharp 75 basis point interest rate hike, the market's expectations for the continued widening of the monetary policy difference between Japan and the United States and the further widening of the interest rate gap between the Japanese yen and the US dollar have strengthened.
After the Bank of Japan released the news, the yen exchange rate in the Tokyo foreign exchange market once fell to 145 yen per dollar, a new low in 24 years.
Bank of Japan Governor Haruhiko Kuroda told a news conference after the monetary policy meeting that Japan's financial policy does not target the exchange rate and stressed that the Bank of Japan will not raise the exchange rate.
Regarding the current negative interest rate policy in Japan, Kuroda Haruhiko believes that it will not cause major side effects or problems.
In the face of the rapid depreciation of the yen, Kuroda said: "There are many factors that affect the exchange rate. The reasons for the depreciation of the yen are both unilateral and speculative. The continuous depreciation of the yen makes it difficult for companies to formulate long-term development. Planning has also increased the uncertainty of the economic outlook, which is negative for the Japanese economy." Kuroda also believes that it is necessary to pay full attention to the impact of financial and foreign exchange market trends on the Japanese economy and prices.
"Third in the world" hangs
Affected by the continued depreciation of the yen, Japan's total GDP in US dollars has fallen back to 30 years ago.
A few days ago, the "Nihon Keizai Shimbun" quoted the forecast of the Organization for Economic Cooperation and Development (OECD) as saying that Japan's nominal GDP is expected to be 553 trillion yen this year, or 3.9 trillion US dollars in US dollars. roughly equivalent.
Japan's economy may fall below $4 trillion for the first time since 1992.
If the yen continues to depreciate or hover at a low level, Japan's GDP will remain below $4 trillion next year.
For 42 years from 1968 to 2009, Japan had been the second largest country in the world in terms of GDP, after the United States.
In 2010, China's total GDP surpassed that of Japan, and Japan has maintained its third position in the world for the next 12 years.
Japanese economic analyst Ken Toba believes that at present, Japan's third position in GDP is in jeopardy.
Judging from the global GDP ranking in 2021, the economic size gap between Japan and Germany, which ranks third, is only 17%.
Ken Toba predicted that the European Central Bank will continue to raise interest rates in the second half of 2022, while the Bank of Japan has maintained an accommodative monetary policy.
Under such circumstances, the depreciation of the yen and the appreciation of the euro will continue in the future. If the depreciation of the yen exceeds the key point of 1 euro to 150 yen, Japan's GDP will fall to the fourth place in the world. It will become a reality.
At present, Germany's total population is about 83.88 million, and Japan's total population is about 125.58 million. If you compare the per capita GDP, Germany is nearly 15,000 US dollars higher than Japan's.
According to the August trade statistics released by the Japanese Ministry of Finance on September 15, due to high energy prices and the depreciation of the yen, Japan's trade deficit in August was 2,817.3 billion yen, the largest monthly deficit in history since 1979.
This is the 13th consecutive month that Japan's international trade balance has been in deficit.
The report shows that due to the soaring international energy prices and the depreciation of the yen, especially the significant increase in the import value of coal, liquefied natural gas, crude oil and other energy sources, the import value of Japan in the month increased by 49.9% year-on-year to 10.88 trillion yen, surpassing the previous year for 19 consecutive months. During the same period, it reached a record high.
At the same time, exchange rate fluctuations also bring another major hidden danger to the Japanese economy.
According to a report by "AsiaNews Network" on the 21st, with the "boots landing" of the Fed raising interest rates, the huge funds held by Japanese households are at risk of flowing overseas.
The report quoted Bank of America's chief foreign exchange and interest rate strategist in Tokyo as saying that the disparity in yields between the two foreign exchange markets in the United States and Japan will stimulate institutional and retail investors to buy and hold dollars.
Japanese households have deposits of 1,000 trillion yen, and even a 0.1% "flight" will have a certain impact on the Japanese economy.
Japanese households' savings have been rising, while the yen has weakened since the beginning of the year, with the yen down 20 percent against the dollar, the report said.
The growing risk of capital flight from Japanese households should be of concern to the Bank of Japan, said the head of Japan market research at JPMorgan Securities in Tokyo.
The director believes that the rapid expansion of Japan's trade balance to a record deficit, the unprecedented weakening of the yen exchange rate, and the gradual loss of purchasing power of the public have made the Japanese public feel that they need to hold some foreign currency to avoid a series of losses caused by the weakening of the yen to the greatest extent. risk.
At present, Japan still maintains negative interest rates, which is "a very favorable environment for capital to flow overseas," said the head of the department of retail investment research institution Gaitame.com.
The country's competitiveness may decline
Japan's Nomura Research Institute economist Kimuchi Tohide commented on the 21st that Japan is suffering from the historic depreciation of the yen.
Usually a depreciation of the yen will help exporters improve their international competitiveness, but individual consumers will have to suffer from high prices.
"The Japanese (Yuan) is cheap and the US (Yuan) is expensive" caused by the interest rate difference between Japan and the United States will continue for a long time, and rising prices will also become a long-term trend.
Daisaku Ueno, chief foreign exchange strategist at Japan's Mitsubishi UFJ Morgan Stanley Securities, said in an earlier interview with the Nikkei that the last time the yen depreciated sharply was in 1998. At that time, affected by the financial crisis, there was "short selling in the capital market". The strong color of "Japan" has led to the continuous depreciation of the yen.
This time, against the backdrop of stagnant exports from Japan, the yen depreciated, reflecting the decline in Japan's intrinsic competitiveness as a country.
Akihisa Mizuno, president of the Central Japan Economic Federation, previously said that the depreciation of the yen is not entirely positive for exporters.
Mizuno Akihisa said: "With the depreciation of the yen, Japan's exports have not significantly increased. Moreover, due to the restrictions on chips and components in the Japanese automobile and other manufacturing industries, a large number of companies are in a state of being unable to produce from time to time. Although many views believe that exports Companies will benefit from a weaker yen, but as things stand, it's hard to say that the yen's devaluation has had a broad positive effect."
Mizuno Akihisa also believes that from the perspective of companies, excessive fluctuations in the yen exchange rate will bring uncertainty to corporate development plans.
In order to stabilize the exchange rate, I hope that the government will take relevant measures and study providing support to those companies that cannot enjoy the dividends of the depreciation of the yen.
Chen Yan, executive director of the Japanese Enterprise China Research Institute, said in an interview with a reporter from the Global Times on the 22nd that under normal circumstances, the depreciation of the yen is beneficial to overseas tourists visiting Japan, but due to the impact of the new crown pneumonia epidemic, Japan's Tourism and tourism did not get the expected recovery and development.
At the same time, due to soaring global energy prices, the Federal Reserve's frequent interest rate hikes have brought Japan's inflation rate to record highs, leading to skyrocketing domestic prices in Japan, offsetting the export competitiveness brought about by a weaker yen.
High production costs, coupled with weak purchasing power, are all detrimental to Japanese companies.
Chen Yan believes that the weakening of the yen means that its US dollar-denominated economic index will be under pressure, such as GDP will shrink sharply.
If Japan wants to improve its national strength and restore economic prosperity, it can make changes in two aspects: one is to reform the administrative system; the other is to carry out technological innovation, promote the development of high value-added industries, focus on innovative breakthroughs in high-tech fields, and guide the yen to strengthen .