Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

Can anyone explain to me why the yen is losing value?

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Topic Forums » Economy Donate to DU
 
Lydia Leftcoast Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-15-04 08:43 PM
Original message
Can anyone explain to me why the yen is losing value?
I can't see any external reasons, and this is an important question for me, since I'm paid mostly by Japanese customers.

Thanks!
Printer Friendly | Permalink |  | Top
unblock Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-15-04 08:48 PM
Response to Original message
1. dollar going up
now that greenspan has signalled that he will raise rates soon, the market has adjusted, so rates are already higher. this makes u.s. debt more attractive, and so the u.s. dollar is more attractive.

this makes the yen less attractive relative to the dollar.
Printer Friendly | Permalink |  | Top
 
Lydia Leftcoast Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-15-04 09:05 PM
Response to Reply #1
2. Darn!
:-(
Printer Friendly | Permalink |  | Top
 
ozymandius Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-15-04 09:45 PM
Response to Original message
3. by design
Japan has worked for years to keep the yen weak. Their intervention in buying wheelbarrows-full of dollars keeps the yen weak while strengthening the dollar. This makes their exports (CD/DVD players, TVs, computer parts) more affordable. They would rather take a hit on the currency market rather than allow China (or anyone else) to overtake them in exports markets.
Printer Friendly | Permalink |  | Top
 
rapier Donating Member (997 posts) Send PM | Profile | Ignore Sat May-15-04 11:04 PM
Response to Original message
4. notes
There is no way to "explain" the movments of the currencies. Oh sure, I could give you pages and pages of explainations but it would all be bullshit.

I don't know why you can't think of a reason why it might be weak, seeing as they have a government debt vs their GDP that makes ours look reasonable. (Well at least our recognized debt but not including all those unfunded liabilities) Or the fact that they essentially printed up something like $80 billion worth of yen in Jan and Feb alone to prop the dollar, and of course weaken their yen. None of which I'm saying is the explaination for a weaker yen but it is sure one that many think is a good reason.

Despite the possibly snarky sounding tone of the above comments I mean no disrespect. Really.

Everyone wants some simple cause and effect "reason" for these things that relates to events external to the markets. The thing is that currencies are now being driven almost exclusively by factors which are internal to the markets. Those being many but primarily the positions of traders, read that speculators, who rush from one side of the boat to the other driven by those old reasons, greed and fear.

Since currencies are now a totally ephemeral thing and they are expanding at a breakneck pace all over the globe I think everyone can appreciate that trying to figure out what they are worth is a fools errand.
Printer Friendly | Permalink |  | Top
 
bemildred Donating Member (1000+ posts) Send PM | Profile | Ignore Sat May-15-04 11:29 PM
Response to Reply #4
5. Agreed.
At least that the notion that there is some sort of rational
and predictable process at work based on "underlying conditions"
is poppycock. There does seem to be a certain amount of local
correlation, todays price is not too far from yesterdays, but
otherwise it's chaotic at the day to day level. Better to face
the facts than go down in flames defending the illusion that
you understand it. Poker players know they are gambling, so
should we all.
Printer Friendly | Permalink |  | Top
 
Lydia Leftcoast Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-16-04 08:50 PM
Response to Reply #5
6. I understand that part about currencies being ephemeral, but
I just wanted to know why it had suddenly weakened after rising for several months.
Printer Friendly | Permalink |  | Top
 
bemildred Donating Member (1000+ posts) Send PM | Profile | Ignore Sun May-16-04 11:22 PM
Response to Reply #6
7. I understand, it's a reasonable question.
There are three "reasons" I can think of:

1.) Greenspin made interest-raising noises and spooked the herd.

2.) Manipulation.

3.) Random variation, we've been up a lot, nothing surprising about
going down some.

The canonical reason I hear is that if interest goes up the dollar
is a "better investment" so everybody anticipates and buys dollars.
This is poppycock, nobody buys dollars because the interest rate
may go up half a point in six weeks (IMHO, someone will now come
out and say that THEY do, I suppose.)

I favor #2, I think modern currency markets are rigged a good deal,
or controlled if you prefer, which is not that tricky to do when
you can print all you want. Hence: "The dollar went up because
someone wanted it to go up for a while."

It is fairly interesting to consider that Japan has struggled for
months to keep the dollar from falling too much, and that NOW, when
Japan is said to have stopped intervening, it suddenly decides to
rise on it's own.
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Tue Jul 22nd 2014, 06:57 PM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Topic Forums » Economy Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC