Eurasia Review on Nostr: Exchange Rate Uncertainty Endangers Japan’s Economic Stability – Analysis ...
Exchange Rate Uncertainty Endangers Japan’s Economic Stability – Analysis
==========
In early August 2024, Japan's role in a global financial mini-crash was highlighted by the Bank of Japan's unexpected July decision to raise the key interest rate and halve bond purchases; this led to market turmoil and a sudden yen appreciation. The Bank of Japan postponed further interest rate increases due to market recovery. Japan's floating yen has caused unrest since the 1980s, with past depreciations and appreciations impacting trade and financial stability. The yen's depreciation contributed to the 1997 Asian Financial Crisis and the 1998 Japanese financial crisis, leading to a prolonged low-interest rate policy. Abenomics since 2013 has pushed 10-year government bond yields to zero, prompting Japanese banks and pension funds to invest abroad, accumulating large foreign assets. As of the end of 2023, Japan's net foreign assets reached approximately 471.3 trillion yen (US$3.4 trillion). The risk of yen appreciation threatens the value of these foreign assets, especially amid Japan's ageing society. The Bank of Japan's expansionary monetary policy has kept interest rates low but faces inflation pressures exceeding 2% since 2022. Prime Minister Shigeru Ishiba supports accommodative monetary policy, while pegging the yen to the dollar could stabilize the economy and protect consumers from inflation.
#Japan #Economy #ExchangeRate #BankOfJapan #Abenomics #FinancialStability #Inflation #Yen #InterestRates #ForeignAssets
https://www.eurasiareview.com/26102024-exchange-rate-uncertainty-endangers-japans-economic-stability-analysis/
==========
In early August 2024, Japan's role in a global financial mini-crash was highlighted by the Bank of Japan's unexpected July decision to raise the key interest rate and halve bond purchases; this led to market turmoil and a sudden yen appreciation. The Bank of Japan postponed further interest rate increases due to market recovery. Japan's floating yen has caused unrest since the 1980s, with past depreciations and appreciations impacting trade and financial stability. The yen's depreciation contributed to the 1997 Asian Financial Crisis and the 1998 Japanese financial crisis, leading to a prolonged low-interest rate policy. Abenomics since 2013 has pushed 10-year government bond yields to zero, prompting Japanese banks and pension funds to invest abroad, accumulating large foreign assets. As of the end of 2023, Japan's net foreign assets reached approximately 471.3 trillion yen (US$3.4 trillion). The risk of yen appreciation threatens the value of these foreign assets, especially amid Japan's ageing society. The Bank of Japan's expansionary monetary policy has kept interest rates low but faces inflation pressures exceeding 2% since 2022. Prime Minister Shigeru Ishiba supports accommodative monetary policy, while pegging the yen to the dollar could stabilize the economy and protect consumers from inflation.
#Japan #Economy #ExchangeRate #BankOfJapan #Abenomics #FinancialStability #Inflation #Yen #InterestRates #ForeignAssets
https://www.eurasiareview.com/26102024-exchange-rate-uncertainty-endangers-japans-economic-stability-analysis/