Currency Manipulation/ and our NISA.

[Bubblegun]

Well that certainly stung the other day. The S&P500 fell 1%, but the biggest hit was the currency change when the BoJ intervened.
To see a lot wiped out was pretty galling, but also good training for the future. I must remember I am still up in the long term, even though it appears shocking in the short term. That was nearly 400,000 yen just wiped out in one account.
I don't think I will look at my other accounts. LOL.

I have to wonder why the BoJ would want to do this. Especially if this is going to hit people's NISA's.

I do have another question though. If the Fed cuts interest rates, and the yen strengthens, normally we would expect the stock market to improve,(in the US), would this be beneficial painful for us, or neutral? So if the yen strengthens would this be counterbalanced by gains in the stock market?

If Bloomberg is right the BoJ just spent 22 billion on it. I'm not sure what to think about that, or how much that would be if you just gave pensioners a decent pension. LOL
https://www.bloomberg.com/news/articles ... ter-us-cpi

[RetireJapan]

Well that certainly stung the other day.

Unless you sell, you are neither up nor down. It's just potential.

Try this mental exercise: imagine the yen goes back to 80 to the dollar

The exchange rate also affects the price of energy and imports. A stronger yen would allow us to buy more foreign funds for the same amount of yen.

I'd like to see a stronger yen, even though it would make me less well off on paper.

[Deep Blue]

I have to wonder why the BoJ would want to do this. Especially if this is going to hit people's NISA's.

MoF decides it, not the BoJ. They spent 22bn worth of foreign currency reserves in this intervention.

The weak yen is causing all sorts of pain for most households. You can't have failed to notice prices rising in the past few quarters, far in excess of how salaries have been rising? Real personal income growth has been negative for something like 18 months. Households are getting continously poorer, which is the main reason Kishida's poll ratings are in the toilet.

I do have another question though. If the Fed cuts interest rates, and the yen strengthens, normally we would expect the stock market to improve,(in the US), would this be beneficial painful for us, or neutral? So if the yen strengthens would this be counterbalanced by gains in the stock market?

This is a more interesting question. If everything else was held the same, a strengthening yen would be negative for Topix profits as a whole, so we would expect the index to fall. But, things don't happen in isolation - a strenthening yen would be good for households and might help domestic consumption. It might mean the Federal Revenue is acing to avoid a hard landing (US recession) which would be good for the stock market... it might mean investors accept a higher valuation on stocks so this negates the pressure from lower profits...... so many things interplay. We can say over the past decade or some, Topix has preferred a weaken yen. But if we look into the deeper past, a rising yen often accompanied a rising stock market.

[Deep Blue]

That was nearly 400,000 yen just wiped out in one account.

I suggest the appropriate frequency to check your investment accounts is once or twice a year.

[mikele3]

Try this mental exercise: imagine the yen goes back to 80 to the dollar

2011 - 68yen per dollar … please

[Bubblegun]

Well that certainly stung the other day.

Unless you sell, you are neither up nor down. It's just potential.

Try this mental exercise: imagine the yen goes back to 80 to the dollar

The exchange rate also affects the price of energy and imports. A stronger yen would allow us to buy more foreign funds for the same amount of yen.

I'd like to see a stronger yen, even though it would make me less well off on paper.

It is just potential, although I have never been a fan of a strong yen, because that also hurts companies who wish to repatriate their dollars back into yen, and they squeeze their subcontractors more, which hits profitability, which hits salaries and bonuses for the workers.

I have to wonder why the BoJ would want to do this. Especially if this is going to hit people's NISA's.

MoF decides it, not the BoJ. They spent 22bn worth of foreign currency reserves in this intervention.

The weak yen is causing all sorts of pain for most households. You can't have failed to notice prices rising in the past few quarters, far in excess of how salaries have been rising? Real personal income growth has been negative for something like 18 months. Households are getting continously poorer, which is the main reason Kishida's poll ratings are in the toilet.

I do have another question though. If the Fed cuts interest rates, and the yen strengthens, normally we would expect the stock market to improve,(in the US), would this be beneficial painful for us, or neutral? So if the yen strengthens would this be counterbalanced by gains in the stock market?

This is a more interesting question. If everything else was held the same, a strengthening yen would be negative for Topix profits as a whole, so we would expect the index to fall. But, things don't happen in isolation - a strengthening yen would be good for households and might help domestic consumption. It might mean the Federal Revenue is acing to avoid a hard landing (US recession) which would be good for the stock market... it might mean investors accept a higher valuation on stocks so this negates the pressure from lower profits...... so many things interplay. We can say over the past decade or some, Topix has preferred a weaken yen. But if we look into the deeper past, a rising yen often accompanied a rising stock market.

Pain? Is it all relative? To one person it's very painful but if you're working for Mitsubishi, Toyota,et al, are they getting the same level of pain, not to mention the shareholders who want that dividend?
Pain? Yes, I have noticed a slight difference. but I am also happy to see more imports become more expensive it also supports Japanese farmers or Japanese companies and not cheap junk from abroad. Do we want our cake and eat it? We want cheap imports, but think we can get a good salary increase here at home? I don't know it seems, just like a see saw. The UK depends on imports and produces nothing, cause we want those cheap goods so we move production overseas. Then we stop making things and buy Japanese, Korean, and Chinese cars or clothes from Bangladesh, and then all we have left is a financial sector or cafes. Negative wages for 18 months? Mmmmmmm. I think it seems to be a lot worse as some people haven't had a wage rise in decades. I'm just wondering, Maybe there is no GOOD or BAD. Weak yen is great for Japanese exporters, but bad for importers. A strong yen is great for importers and bad for exporters.

I am wondering if this is all just like squashing balloons one area is pushed down only for another area to inflate.

I suggest the appropriate frequency to check your investment accounts is once or twice a year.

I couldn't agree more. Just my OCD elements kicking in guess. LOL

[Deep Blue]

Negative REAL wages i.e. inflation adjusted.

Yes, nominal wages didn’t rise for years but then neither did prices. So it wasn’t so painful for most households. But now prices have been rising sharply due to weak yen and salaries have lagged this so real wages are have been negative.

People have been struggling to pay their way, downgrading and cutting out luxuries to make ends meet. This isn’t really in dispute I feel? There have been literally hundreds of articles talking about it both in the foreign and domestic press for well over a year now.

Union workers did secure a second consecutive wage this year so hopefully the effect will start to ease soon.

As for manufacturing and food production, Japan is in a massive calorie deficit and has been steadily offshoring production for two decades now. Where do you think the great Japanese retailers like Uniqlo and Nitori make everything they sell here? I’ll give you a clue… it isn’t in Nihon. Uniqlo doesn’t even own a factory.


Without food imports Japan would starve, as a country we’d have to cut our calorie intake by half.

Japan is actually pretty similar to the UK in terms of food self-sufficiency.

[Bubblegun]

We get the Import and export arguments, Food imports, Uniqlo thing,Toyoto,JAL,ANA thing, etc etc.I don't think there is an A is good, B is bad. Or B is good and A is bad. I just see that as a balloon problem, push down on one area another area increases. I've seen enough currency crises in my lifetime. LOL.1967 devaluation,1976-IMF, Dollar crisis, Black Wednesday, Brexit, and A budget to sent the markets crashing, But these were visually and emotionally abstract. Showing my age there. LOL But to visually see it, that was interesting.

I guess my real question is, what would be a good level for Japan?
The visual learning experience was invaluable, to see this is a good way to desensitize myself for any coming crashes. And while seeing the daily or monthly numbers fall was interesting, it's a good reminder to look at the long game.

In regards to calorific intake. Some nations could do with some calorific tightening l.
37% of the UK population could certainly do with reducing their calorific intake by at least half. Kebab on a deep-fried pizza, and deep-fried mars bars. Certainly isn't my idea of Cuisine. LOL The hardest part is, they are the more likely to live in poverty because bying fresh food imported or not is expensive.

[Tsumitate Wrestler]

Well that certainly stung the other day. The S&P500 fell 1%, but the biggest hit was the currency change when the BoJ intervened.
To see a lot wiped out was pretty galling, but also good training for the future. I must remember I am still up in the long term, even though it appears shocking in the short term. That was nearly 400,000 yen just wiped out in one account.
I don't think I will look at my other accounts. LOL.

I have to wonder why the BoJ would want to do this. Especially if this is going to hit people's NISA's.

I do have another question though. If the Fed cuts interest rates, and the yen strengthens, normally we would expect the stock market to improve,(in the US), would this be beneficial painful for us, or neutral? So if the yen strengthens would this be counterbalanced by gains in the stock market?

If Bloomberg is right the BoJ just spent 22 billion on it. I'm not sure what to think about that, or how much that would be if you just gave pensioners a decent pension. LOL
https://www.bloomberg.com/news/articles ... ter-us-cpi

A strengthening yen and a bear stockmarket would cause huge paper loses, so days like this are a good reminder that paper gains are just that, theoretical .

Those close to retirement, or retired, need to consider that very real possibility and maybe consider a larger cash (or cash like) position.

[Bubblegun]

Well that certainly stung the other day. The S&P500 fell 1%, but the biggest hit was the currency change when the BoJ intervened.
To see a lot wiped out was pretty galling, but also good training for the future. I must remember I am still up in the long term, even though it appears shocking in the short term. That was nearly 400,000 yen just wiped out in one account.
I don't think I will look at my other accounts. LOL.

I have to wonder why the BoJ would want to do this. Especially if this is going to hit people's NISA's.

I do have another question though. If the Fed cuts interest rates, and the yen strengthens, normally we would expect the stock market to improve,(in the US), would this be beneficial painful for us, or neutral? So if the yen strengthens would this be counterbalanced by gains in the stock market?

If Bloomberg is right the BoJ just spent 22 billion on it. I'm not sure what to think about that, or how much that would be if you just gave pensioners a decent pension. LOL
https://www.bloomberg.com/news/articles ... ter-us-cpi

A strengthening yen and a bear stockmarket would cause huge paper loses, so days like this are a good reminder that paper gains are just that, theoretical .

Those close to retirement, or retired, need to consider that very real possibility and maybe consider a larger cash (or cash like) position.

Thanks for everyone's answers above.

That's exactly it. It's just on paper. A bit like having massive profits on house values. There is nothing there until you sell.

Or we could also diversify into the Nikkei225.( that's another can of worms).
Now, I suppose another question is, Why would the MoF/BoJ want to manipulate its currency? Why not let the market do it? After all, if 110, all the way up to 160, why let it rise that much anyway, if this is all due to the FED and BoJ interest rates,(as I read somewhere) why not wait and ride it out until say September when the FED may or may not cut rates. I get all the arguments about imports becoming more expensive, but if that's the real reason, why let it rise that much anyway?