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Yen Collapses as Japan Takes a Holiday: No Verbal Support in Sight

Yen Collapses as Japan Takes a Holiday: No Verbal Support in Sight

Bank of Japan’s Intervention Strategy

Bank of Japan intervention was, and still is, directed at controlling JGBs. Its not even a secret, YCC is Yield Curve Control! The BoJ tells us that while that policy is abandoned they are still committed to buying the same amount, so it’s still prevalent, with no change. On the currency, Japan’s Ministry of Finance, the authority that will direct the Bank of Japan to intervene (if it ever does!) is hyper-aware of the 500-odd bp carry that exists between the USD and JPY.

The Impact on Individuals

As a result of Japan’s holiday and lack of verbal support, the yen has experienced a significant drop in value. This can have various effects on individuals, especially those who are involved in foreign exchange trading or international business transactions. For individuals holding yen, this could lead to a decrease in the value of their assets denominated in yen. On the other hand, individuals holding foreign currencies like USD may see an increase in the value of their assets relative to the yen.

The Global Impact

The collapse of the yen due to Japan’s holiday and lack of verbal support can have far-reaching effects on the global economy. A weaker yen could make Japanese exports more competitive in international markets, potentially boosting the country’s export-driven economy. However, it could also lead to concerns about currency manipulation and trade imbalances, especially if other countries respond by devaluing their own currencies in response.

Conclusion

In conclusion, the collapse of the yen as Japan takes a holiday with no verbal support in sight has significant implications for both individuals and the global economy. The lack of intervention from the Bank of Japan and Ministry of Finance could lead to further volatility in the currency markets and impact international trade. It will be important to monitor the situation closely and consider the potential implications for various stakeholders in the financial markets.

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