Lots of speculation that Japan will intervene and raise rates. Then they would have to sell their US treasuries/foreign holdings to pay down the higher interest on the debt.
They could also go the hyperinflation route and pay off their local debt in worthless paper. Which still ends with them selling treasuries to fund imports.
How they have managed to not implode with that high of a debt to gdp is beyond my limited view.
This is strange:
At 9:30 PM ET, the Japanese Yen weakened to 160 against the US Dollar for the first time since 1990.
Exactly 2.5 hours after the headlines came out, the ratio just crashed from 160.20 to 156.50.
That's a ~2.5% swing in one of the biggest currencies in the… pic.twitter.com/yX4YLX7Veh
— The Kobeissi Letter (@KobeissiLetter) April 29, 2024
For all those looking for possible ripple effects in the global financial system of what the #BOJ (now more than ever Bank of #Japanzuela) is doing, this tread touches upon many interesting aspects of it 👇🏻 t.co/YRoAS5NgrC
— JustDario 🏊♂️ (@DarioCpx) April 29, 2024
They tried today but I am
afraid they failed so far— JustDario 🏊♂️ (@DarioCpx) April 29, 2024
Yuan Devaluation Debate Surfaces as Traders Weigh Next FX Shock
(Bloomberg) — There is quiet yet mounting speculation in financial markets that China will need to take an extreme and highly controversial measure to support its moribund economy — devalue the yuan in a big-bang move.
Supporters of a sharp currency depreciation say it would allow Beijing boost exports and give the central bank room to cut interest rates. Doubters argue it would only lead to a feedback loop of capital outflows and further yuan declines with the potential to destabilize the global currency market.
Though a minority view, it’s attracting attention as China digs deeper into its toolkit to stimulate an economy and win over investors disappointed by a piecemeal approach to monetary and fiscal support. It’s a controversial option that hasn’t been used since the shock devaluation in 2015, which hammered yuan assets and evolved into a crisis of confidence in China’s ability to control markets.
finance.yahoo.com/news/yuan-devaluation-debate-surfaces-traders-011124745.html
h/t OkDraw606