Why The Japanese Yen Crashed ! #USDJPY
Some friends of mine recently returned from a vacation to Japan and they can’t stop talking about how cheap their trip was. Checking the charts, these days one U.S. dollar buys almost 160 yen, meaning the dollar is the strongest it’s been versus the yen in decades.
Currencies are not always easy to think about. When a stock or commodity price goes up, it does so more or less in absolute terms.
It now is worth more and you are objectively richer. When a currency goes up (or down), it does so in relative terms.
When the dollar strengthens, I don’t feel suddenly richer. Similarly, when the Yen drops in price against the dollar or other major currencies, Japanese citizens don’t suddenly feel impoverished.
Rather, everyone goes about the business of living their lives, too busy to notice these big currency moves.
But over time, you start to feel the impact. American tourists realize how cheap Japanese tourism and goods have become. Japanese citizens start to notice that prices for imported goods, especially commodities that are priced in dollars.
