Japan Lover with cheap Yen I
Dear all,
Yup, I am having good mood back in HK... :P
Reading newspaper on hand, not through internet is an enjoyable thing to do.
About currency, of course I am concern with Yen, which is as a form of allowance to be given by my company to me. However, Yen has been at the record low price since 2002. Low Yen is a hot topic being discussed, that means "Yeah, you can go japan shopping cheaply~!" However there is also other implication.
After the econ slides in 90s, Japanese Yen has been close to zero interest rate for a long time. Because of low interest rate, many funds would borrow Yen to put in other currencies like Australian to earn interest. We call it Carry Trade:
The low Yen means it is even better to borrow more yen for this carry trade, and people are starting to fear that may cause the russia crisis in 1998 http://en.wikipedia.org/wiki/Russian_financial_crisis, during such incident, Yen was up from 147 to 112 in a matter of days.
A low Yen would mean a low cost of sales, and to export something like Toyota and PS3, the companies in Japan in fact is making more money. This is like an opposite of Chinese RMB. This is the reason why the whole world is asking to raise RMB even higher. However, low Yen is getting complicated, since the internal sales and salary rise is still very slow (poor Eric), and doesn't like RMB, there is no inflation fears in Japan.
However, because of this Fund involves in currency may make money these days, however be careful of Japanese Yen interest rate, which will be discussed every 3rd week of the month. I cannot see this coming time there is any hint to raise the Japan interest rate. In this case, the japanese heavy exporter companies will be benefit in the whole Q1.
Eric