USD/JPY back to a 100, but when?

Discussion in 'Forex' started by zxd, Mar 23, 2011.

  1. zxd


    Eventually, USD/JPY will get back to 100, it's only a matter of time, but how long do you think it will take? The fall from 100 to the current level took about 2 years.

    In 1995 however after the Kobe earthquake, the Yen rose from ~80 to 100 in just a few months (about 6 I believe). However, that was after it dropped from the high 80s low 90s level prior to the earthquake (we were already trading in 80-85)

    When do you think USD/JPY will get back up to 100?
  2. Roark


    When the US starts increasing interest rates.
  3. da-net


    Normally I would agree with you, but considering all the bad news coming from Japan concerning the reactor leakage, crops of all kinds in 4 prefectures(states) that are being questioned as to the health risk of consumption, plus milk, water (fresh and ocean), fish, planes being turned back by China, quite a few embassies moving out of Tokyo, radiation levels in Tokyo, foreign governments saying 80 kilometers from the reactors and Japan holding to 20 kilometers, etc etc

    Considering that Japan has been too tight lipped about the situation at the reactors and how bad it really is...Are the consumers of the world going to trust Japanese goods or shun Japanese goods fearing radiation? If so for long?

    I am now questioning whether or not we are at the beginning of a long term trend change not simply knee jerk reactions or a bounce. It is too early to tell for me.
  4. zxd


    Two things for this though:

    1. Don't we practically have a bottom here though with the G-7 pledging to support the Yen from strengthening past 80 (sure we can have a spike past below 80 but how far) and BoJ saying they wouldn't like to see the Yen below 80?

    2. Shouldn't decreased demand for imports from Japan cause their currency to weaken? We stopped buying many goods from Iran after the Iranian Revolution and their currency weakened significantly.
  5. DrEvil


    My take is this:

    Japan has been going through deflation over the last 20 years which explains why their currency has continued to strengthen. It would have been over long ago if th BOJ had allowed the necessary debt destruction to proceed. The recent dissasters have destroyed a lot of debt in a very short period and provided a reason for the BOJ to really start picking up debt levels during the rebuilding. This could mark the beginning of a weakening of the Yen across the board as now U.S and others are emabarking on the Japanese 20 year deflation scenario themselves.
  6. da-net


    Even with the recent intervention by the G7 the long term trend is still in place. Does the G7 have the capability of reversing the trend?

    Japan will need massive amounts of Yen to pay for reconstruction, which I've read estimates of 5 years. Current cost estimate are north of $235 billion and remember that the reactor situation is still not under control so these cost estimates are not reliable.

    just some quick headlines from Neikki news;

    TOKYO (Kyodo)--A total of 1,135 listed companies had their operations damaged by the March 11 massive quake-tsunami disaster that jolted northeastern Japan, and if nonlisted companies are included, the number of disaster-hit firms should rise significantly, a credit research agency said Thursday.

    Foreign Arrivals At Narita Airport Dive 60% Since Quake

    *Australia Halts Food Imports From Affected Regions In Japan

    Canada Restricts Japan Food Imports Over Nuclear Crisis

    Two workers at the Fukushima-1 nuclear power plant have been hospitalized for radiation exposure suffered on Thursday.

    Radiation also continues to be detected above normal levels as far as 300 kilometers south of the facility, which was knocked out of commission by a huge quake and tsunami nearly two weeks ago.

    Radioactive Iodine 146.9 Times Higher In Seawater Near Nuke Plant
  7. Japan has been different. The people have been united and working together and not blaming each other for anything so far. There has been no rioting as riots do take place in such calamities. That is admirable, something we all can learn. Hence, their economy though hit at the moment, shall surely bounce back.