The fundamental reason for the depreciation of the yen

Why did the yen not appreciate like the US dollar after Japan's interest rate hike?

Japan's interest rate hike hit the Japanese people's expectation of a steady increase in economic inflation, resulting in a decrease in national consumption. The downward trend in inflation will inevitably lead to rising prices. Now the interest rate hike has reversed, and future price expectations have turned to declines, which has suppressed Japan's consumption growth. Suppressed consumption has worsened economic expectations, leading to a surge in bearish yen options. This is the theoretical basis for Wall Street to intervene and short Japan.

At the same time, Japan must shrink its balance sheet if it raises interest rates. Shrinking its balance sheet means reducing its purchase of Japanese government bonds. If it reduces its purchase of government bonds, the government's investment in Japan will inevitably decrease, which hits the enthusiasm of companies to expand production and reduces the government's investment in public projects from the source. Reduced investment further stimulates consumption shrinkage, forming a vicious cycle.

The rapid depreciation of the currency has led to an increase in import costs. When the increase exceeds corporate profits, companies would rather default than supply goods as scheduled. This is why the depreciation of the yen has led to an increase in Japan's purchases from China. Because the stability of the RMB can protect the profits of Japanese companies in China, it is more cost-effective to import from China than directly from Japan. However, the increase in imports from China will further expand Japan's trade deficit and worsen government finances, forming a vicious cycle again. The above two closed loops are linked together, and under resonance, the Japanese economy is down, and Wall Street short selling further collapses the yen.

After Abe was assassinated, Yellen's original visit to Japan was cancelled. The reason for the cancellation was that the United States succeeded in its evil plan and had already obtained bargaining chips without having to negotiate with Japan again. The biggest figure in Abe's economics in the Bank of Japan is Kuroda Haruhiko. If Abe dies, Kuroda will inevitably step down.

Once Japan raises interest rates, it will inevitably shrink its balance sheet. The money saved will naturally be used to buy U.S. Treasury bonds, rather than for domestic investment in Japan.

Recently, the United States once again listed Japan as a currency manipulation watch country, which is a warning to Japan not to intervene in the falling yen, that is, to continue to use Japan's foreign exchange reserves for intervening in the exchange rate to buy U.S. bonds. Yellen was so urgent at the time because China and other countries were selling U.S. bonds. If Japan did not expand its purchase of U.S. bonds to take over, the U.S. financial system would be out of control.

Holding USDT can save you from disaster.