$JPY lost 3 figures in a single day… ladies and gentlemen the #Japan currency crisis officially started
Make yourself comfortable and enjoy the show 🍿 t.co/vxXze6OqOs pic.twitter.com/jRjle2u6PA
— JustDario 🏊♂️ (@DarioCpx) April 27, 2024
A specter looms over Japan as the yen plunges, heralding the onset of a historical currency crisis. In a single day, the Japanese yen loses three figures, marking the official commencement of the crisis. The once-dominant yen carry trade now faces its reckoning, as the currency’s parabolic descent accelerates.
As USDJPY charts a relentless course through barriers, the Bank of Japan stands impotent, unable to stem the tide of decline. Authorities grapple with a painful reality: they are trapped in a web of systemic vulnerabilities, with debt-to-GDP ratios soaring to staggering heights.
Behind the facade of diplomatic smiles, Japanese Prime Minister Kishida and his counterparts face a grim truth. With debt burdens reaching astronomical levels, Japan’s ability to normalize rates is severely curtailed. Instead, a massive carry trade emerges, exacerbating the yen’s downward spiral.
Meanwhile, in the US, a troubling economic landscape emerges. A massive 50% downside miss on GDP coupled with hot PCE inflation signals the return of stagflation. With government interest expenses soaring and trillion-dollar deficits looming, the US hurtles towards the Monetary Event Horizon, where debt growth accelerates unabated.
As Powell contemplates “higher for longer” rates in response to inflationary pressures, the outlook for Japan grows ever bleaker. With each passing day, the Asian behemoth braces for more pain, caught in the grip of a currency crisis with no easy escape.
Sources:
this is it. we're moving to a new stage of the Endgame.
Japanese Yen ripping through barriers like paper, passing each level where the BoJ intervened before. The slow motion meltdown has finally begun to accelerate, and authorities are powerless to stop the decline, unless they… pic.twitter.com/LhX9AWExIo
— Peruvian Bull (@peruvian_bull) April 27, 2024
When I hear bulls claim victory on the Yen carry trade, I have to remind them that it's not wise to declare victory in a record crowded trade that has yet to be tested. pic.twitter.com/Q4RFUOBW4i
— Mac10 (@SuburbanDrone) April 27, 2024
Here's what the gold price in yen currently looks like.
And people don't really earn much interest in yen, so it's a pretty apples-to-apples price comparison over the past three decades. pic.twitter.com/DvKox5p8EZ
— Lyn Alden (@LynAldenContact) April 28, 2024
The Yen debasement in one chart
Japan Central Bank decided to buy most of the debt that the state was issuing to prevent the collapse of the entire Japanese system. Of course, something had to give and it was the value (purchasing power) of their currency.
On this chart, you… pic.twitter.com/5cy43LnpdK
— Olivier Crottaz CEFA (@crofin67) April 27, 2024
PBOC might be about to let CNH/CNY weaken materially given total collapse of JPY/CNH.
Very interesting to me that they stopped squeezing Overnight CNH HIBOR.
Trap?🧐@briangobosox @nglinsman pic.twitter.com/Dv5MeAe3ws
— Michael Kao (@UrbanKaoboy) April 27, 2024