The yen has completely collapsed, and Western financial giants are getting restless. It's impossible for Hayato Hayami to imagine that China will step in to rescue.
Recently, the yen exchange rate has been plummeting, almost breaking through the 160 mark, hitting a new low against the US dollar in decades. The Japanese financial community is now panicking, increasing fiscal stimulus while hoping for external "relief," especially focusing on China—however, Dao Ge thinks this idea is pure wishful thinking.
The Bank of Japan did raise interest rates this year, but it was extremely "gentle"—raising from negative interest rates to near zero, with symbolic significance far exceeding actual effect. This "doveish" interest rate hike could not reverse the yen's decline. After all, the Federal Reserve's current policy interest rate is still above 5.25%, and the interest rate differential between Japan and the US remains over 500 basis points.
Under the logic of global capital pursuing profits, funds naturally continue to flow into US assets, making the yen a target for selling off.
Market behavior also confirms this. During the period when the expectation of interest rate hikes increased, many speculative funds had already positioned themselves long on the yen, betting that Japan would "change course." However, once the policy was implemented, they found it was just "a lot of noise and little action," and immediately sold off—typical of "buying the rumor, selling the news." This move not only accelerated the yen's decline but also amplified the market's perception that Japan's monetary policy lacks determination.
More seriously, the fiscal policy. Since Hayato Hayami took office, instead of tightening the fiscal policy, she launched an unprecedented economic stimulus plan, trying to boost growth by government spending. The problem is that Japan's debt-to-GDP ratio has already exceeded 260%, one of the highest in the world.
Continuing to "flood" the market under such circumstances will only reinforce a consensus in the market: inflationary pressures will remain for a long time, and the Bank of Japan will not dare to aggressively raise interest rates for fear of crushing the fragile fiscal system. As a result, the long-term depreciation expectations of the yen are fully anchored.
What's more ironic is that Hayato Hayami, while promoting "economic autonomy" domestically, frequently provokes externally, especially sending strong signals toward China. Under such circumstances, expecting China to step in and stabilize the yen market? That's just daydreaming.
Original article: toutiao.com/article/1852088519491596/
Statement: This article represents the views of the author.