by mariojv on 5/1/24, 5:26 AM with 68 comments
by po on 5/1/24, 7:35 AM
I live in Japan and this has happened so quickly it's been stunning. While not much has changed domestically so far, I am hearing and starting to see foreign people question whether they could work and live here long term if it stays like this. It's fine if you are earning USD and visiting Japan (wow there are so many tourists this year) but if your salary is priced in JPY and you plan to retire in the US, it's basically impossible right now.
My understanding is that most of the pain in JPY is being caused by carry trades by the financial sector. Because they are very common currencies and most traders right now believe that both the US and JP are stuck with a wide spread in interest rates... you can borrow JPY and invest in USD and make 4-5% on it.
As an aside, I also wish we didn't use the terms strong/weak for currencies because it carries a good/bad connotation. It's just high/low and there are pros/cons to each.
by metaphor on 5/1/24, 5:54 AM
by avidiax on 5/1/24, 6:25 AM
You wouldn't think that printing money leads to a stronger currency, but perhaps this is a delayed effect after you stop printing.
by ilikerashers on 5/1/24, 8:05 AM
Europe is like a kid copying the US homework, trying to make the equations work.
by rdm_blackhole on 5/1/24, 6:49 AM
If the ECB decides to lower interest rates before the US Fed does, then even more capital will flow in the US because why would you accept a lower interest rate when you can get a better one in the US in the same asset class.
That in turn will keep making the USD stronger than the euro.
by roenxi on 5/1/24, 7:56 AM
On that topic; I've been watching the US Treasury's "Major Foreign Holders of Treasury Securities" [0] with some interest. There are some very big strategic changes afoot; China doesn't seem particularly willing to take US debt any more. They'd going to be 3rd largest holder soon and now hold less than 10% of the outstanding US treasury debt.
[0] https://ticdata.treasury.gov/resource-center/data-chart-cent...
by questhimay on 5/1/24, 7:19 AM
When that happens, oh boy, that's going to be so much money flowing from China to US that it's going to make the dollar even stronger
by eberkund on 5/1/24, 6:35 AM
Normally the exchange rate divergence could be countered by increasing interest rates in the country with the weakening currency. But today it appears most countries are not willing to do this to the extent necessary.
by sampa on 5/1/24, 7:57 AM
been that way for decades
by hindsightbias on 5/1/24, 6:55 AM