Touching less than 99 yen to the dollar, this brings Japan’s currency back to where it started just as Abenomics was ramping up in 2013. With interest rates already negative, a weak currency is one of the few tools Japan has at its disposal. A strong currency will be devastating for efforts to engineer inflation.
Japan will need to prepare a response. Currency intervention seems likely, though history shows fighting against the tide of currency movements usually only helps in the short term, especially if such moves aren’t coordinated with other central banks. And the BOJ, which has held fire in recent months on further easing, now has to prove it has mojo to move markets. On this score, the prospects seem dim.
Japan is already in negative-rate territory, and with U.S. 10-year Treasury yields plunging near multiyear lows Friday, the differential between owning U.S. assets and Japanese assets is shrinking again. This has long been a driver of the yen versus the dollar.
Bank of Japan Gov. Haruhiko Kuroda will be under pressure to go deeper on negative rates, even though doing so in the first place, in January, has seen the yen strengthen, not weaken. With inflation hovering near zero, real interest rate differentials are again in favor of a strengthening yen. Meantime, Japan’s current-account surplus remains robust, creating a structural demand for yen.
The first wave of “Brexit” damage has made a major hit: Japan. As the U.K. contemplated life after Europe on Friday morning, Japan’s yen made its biggest surge against the U.S. dollar since the midst of the global financial crisis in 2008. (wsj.com)
Tokyo’s benchmark stock index nosedived almost 8% Friday as Britain’s decision to leave the European Union sparked an avalanche of selling and wild swings on currency markets. (Japan Today)
For the second straight year Tokyo has topped the list of the most livable cities in the annual Quality of Life Survey conducted by the British lifestyle magazine Monocle. (Japan Times)
The Saitama District Court has sentenced a 47-year-old woman to four years in prison for killing her mother and assisting her father to commit suicide. (Japan Today)
Heavy rain continued to pummel northern Kyushu, including quake-damaged Kumamoto Prefecture, through Thursday, with local governments urging some 703,000 people to evacuate. (Japan Times)
A Japanese man known as the inventor of the modern version of the Othello board game died at his home in eastern Japan on Monday. Goro Hasegawa was 83. (NHK)
When Airbnb was in its infancy, not many people knew about home rental in Japan. Now that everyone wants to ride the boom, fewer hosts are making money. (Japan Today)
A four-car local train derailed in Hiroshima early Thursday after running over a landslide that flowed onto the tracks following heavy rain. (the-japan-news.com)
Human body parts including a head and a foot were found in a park pond in Tokyo on Thursday. (Japan Today)
Infographic argues that today’s youth really isn’t so different from the pre-smartphone generation. (rocketnews24.com)