Business people, when they make a decision about where to source a new project or where to source new parts or where to source a new car, well, at 76 yen to the dollar it’s very easy to come to the conclusion that Japan is not a good place to source that.
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Carlos Ghosn, chief executive officer of Nissan Motor Co. He says Japan faces a “hollowing out” of its industrial base should the government fail to take steps to counter the yen’s rise. (Bloomberg)
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kurisupisu
Japan is not in charge of its own currency-that is the problem............
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JapanGal
I believe everything I read.
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Kronos
And could Mr.Ghosn suggest how the government can do that?
Is he suggesting that the government should keep printing money, sell Yen but risk inflation? Or maybe he has some other suggestions. It would be grateful if he could share it with us instead of just complaining about it.
It is very tiring to see all these people talking crap about the high Yen and the J-Government but not suggesting any solutions.
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Reckless
I love high yen, I paid in yen. 30% premium for my bank account in US. Yeah! But same thing happened early nineties. All cyclical and yen will shoot up to 120 once US raises rates again, then I cry for my low crappy yen pay. But happy now. Yes!
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kchoze
Kronos, here is your solution: the government gets the Bank of Japan to announce that it will print unlimited amounts of money to buy other currency on the global markets so as to make sure that the yen doesn't rise above a certain level. I suggest 90 yen per dollar.
It shouldn't even need to print that much money, because markets work with expectations, so the mere fact that the Bank of Japan says it will not tolerate a yen stronger than a certain level will mean that no one will want to buy yen at a more expensive level, since they could just wait for the Bank of Japan to sell them yen at the aforementioned price level. The problem with current interventions that the BoJ is doing is that it starts with the idea that the intervention will be limited, with a given amount of yen, but since the market works with expectations and knows that the Bank of Japan will run out of money for its currency interventions, people who have yen can just sit and wait until the Bank of Japan runs out of available cash and stops its intervention to start trading yen at a more expensive level again.
This isn't madness. The Swiss central bank did it and it worked. Japan can do it too, if it wants.
Would it result in inflation? First, a bit of inflation wouldn't be too bad in Japan right now. Second, there wouldn't be that much, because inflation is a domestic phenomenon, dependent on currency in movement in the Japanese economy, but if you inject yen on the international markets, those yen will not necessarily seep into the Japanese economy as investors sit on them and uses them as investments.
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cwhite
Well, before the BOJ steps in I hope Japan goes on a spending spree and make strategic purchases
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