Yen hits 3-week low

Sterling made solid gains against the yen, the dollar and the euro ahead of a Bank of England meeting widely expected to cut interest rates

Wouldn't lower interest rates push sterling down against other currencies, everything being equal?

It is a race to the bottom!

We should all have something tangible and unable to be manipulated! Personally I'm buying gold and stocking my freezer with decent food!

This is not good news for any of the countries mentioned. What it means is that industrialized economies are still not growing, even after 8 years of extraordinary measures to cause growth. Despite vast amounts of money pumped into the markets, interest rates pushed down to almost nil, the world's economies continue to falter. And the only solution governments and central banks can come up with is more of the same nonsense, as though what hasn't worked after 8 years will somehow magically begin to work now.

What we are seeing is the bill coming due for decades of vote buying. Politicians have gotten themselves elected by making expensive promises, and kicking the cost of these promises down the road. We are now getting to the end of this road, and the costs cannot be kicked much further.

The result of these promises are national governments which now consume more than one-third of GDP in developed countries. The cost of paying for large government comes from our and our employer's pockets, leaving less money for us to spend, and less money for our employers to spend on our salaries. It truly is a race to the bottom, at least for those of us who work in the private sector.

But rather than do the obvious, which is to cut how much the government collects and spends, governments instead increase spending, and increase taxes, and try to counterbalance the extra weight of these costs by diluting their currencies like third-world dictators, and by manipulating interest rates.

To many people "austerity" is a bad word, but as the public sector consumes more than it contributes to economy, it is the only real solution to the problem. We the people need more money to spend, our employers need more money to pay in the form of salaries, and creating more jobs. And we need this money to have some intrinsic value, which is unlikely when all central banks are doing their best to debase national currencies to create inflation (a stealth tax) to reduce the weight of their debts. We can either do it now, by choice, and suffer for a little while until things turn around, or we can wait for it to happen in the form of an economic collapse, which will cause far more suffering, and a more difficult recovery.

"as the upbeat mood on global stock markets stretched..." Eh? Whatever happened to "Brexit turmoil?"

A THREE WEEK LOW! OH MY GOD! Just think if it was a MONTHLY LOW! The sky is falling, the sky is falling! Send Taro Aso in to correct it quick.

"as the upbeat mood on global stock markets stretched..." Eh? Whatever happened to "Brexit turmoil?"

The "Brexit" was good news, and though the UK may lose the benefit of free trade or travel in Europe, the UK will also not be dragged directly into economic oblivion by the absurd policies of the ECB, which seems to be staffed heavily with economists who would be more at home in Zimbabwe and Venezuela. The UK's financial sector is one of the pillars of the world's system, and making it independent of EU and ECB policies and manipulation is one of the greatest results of the Brexit.

And things are not that "upbeat", as it now looks as though the UK will lower interest rates, instead of raising them, which was what was they had been expected to do. The purported logic behind lower rates is that borrowing becomes less expensive, and because this is so, people will borrow and spend more, creating economic growth. But this is not primary motivation for lower rates, the real reason rates are made lower and lower is because this allows governments, who already borrow and spend too much, to do so even more. For the private sector economy, lowering rates is like giving people and businesses a wallet of cash to spend in a store, except that in this store, the shelves are all empty, and there is nothing to buy. In an environment where the pubic sector siphons off so much, there is very little potential for return on private sector investments, so people simply hold onto their money, as we have been seeing.

Our governments have to realize that they are the source of the problem, and not the solution. The more revenue they consume, the less we have for ourselves to use. And the less we have, the less we will spend, earn, and pay in taxes. Rather than a race to the bottom, it is more like a death spiral.

sangetsu03 great comments as usual. We are really lucky to have you on here mate!

Yen is now at almost 107 to the dollar level. Dropping like a stone! Still, I guess very few foreigners here are crazy enough to hold more than the absolute bare minimum necessary of their funds in yen. So the plunging yen is neutral/good news for most I guess.

Umbrella, when is the yen going to hit 140 yen like you boldly predicted?

As I often write, makes a mockery of the usual "the yen is a safe haven in times of global financial stress". anyone who fled to the yen post brexit is nursing a 6% loss in the last month alone. with the amount of money printing going o in Japan yen should be at 125 or weaker.......

As someone with income and some savings in yen I'll be paying extra close attention to the outcome of the next BOJ meeting, in case...

This week's yen weakness has been quite rough (without a word from Aso), which makes one wonder if some people know something that the rest of us don't. The rapid weakness has been reminiscent of when Abe first grabbed the reins of the LDP and the yen started to crash (when thankfully I first dumped loads of yen).

If Kuroda does go crazy and breaks the BOJ law with "helicopter money", this week's yen weakness could prove to have been just a forewarning. Kuroda himself told parliament earlier this year that helicopter money is illegal in Japan. But if he does something similar anyway, it could trigger a big move down in the yen and much turmoil. So I'll be ready to dump yen for more US dollars and gold price exposure versus yen. (umbrella - I don't fancy Swiss Francs, the Swiss National Bank is too erratic for me.)

Long term, things look bleak for the yen as the BOJ is already financing government spending, it's just not widely recognised for what it is yet. So who knows if it is his next crazy move that breaks the dam?

Short term, if Kuroda stands pat then this week's yen weakness may unwind, and one may hopefully be able to dump yen at more favourable rates later. Perversely, even if Kuroda did do helicopter money, it could backfire in the short term by causing uncertainty like with his negative interest rates and result in yen strength, but I'll take that risk as it's the long term that worries me.

Our governments have to realize that they are the source of the problem,

No, the PEOPLE who keep electing those nutters have to realize it! And there's no sign that the people in Japan are even close...

when is the yen going to hit 140 yen like you boldly predicted? unlikely it will ever get that low, but it certainly isnt going to see the low 90s for any period of time as many forex experts of JT predicted.

Umbrella, when is the yen going to hit 140 yen like you boldly predicted?

You need to keep things in context when thinking about the exchange rate. When the exchange rate hit 125 vs the dollar, most people didn't think very much of it, as many can remember times when the rate was 250 or 300 vs the dollar. But exchange rates are relative, and the math which was used in the 1980's does not apply to rates today. In the 80's, we still exchanged francs and marks, and there was no euro. The actual effective rate when the yen was recently at 125 was closer to the 250 vs the dollar rate in 1985.

when is the yen going to hit 140 yen like you boldly predicted? unlikely it will ever get that low, but it certainly isnt going to see the low 90s for any period of time as many forex experts of JT predicted.

Anyone who could make accurate predictions about exchange rates would not bother to post on places like JT, they would be too busy spending their billions. When you flush all the toilets in a building simultaneously, often the matter in the toilet does not go down as expected. Often it decides not to go down, but to overflow. The world's central banks are all flushing their currencies, it is no surprise to see them not going down in value as predicted.