Will The Yen Still Be Competitive?

Discussion in 'General Trading Discussion' started by Investor, Jun 10, 2015.

  1. Investor

    Investor Well-Known Member

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    With the global economic condition constantly fluctuating, it's often difficult to determine whether a previously dominant, or at least internationally competitive currency, will float or sink...or even rise above the tide.

    As it stands, the Japanese yen has been experiencing such a dramatic fall in value that Japan and other East Asian countries are already preparing for the inevitable economic hit that they are likely to be faced with, along with the "currency war" that's likely to ensue.

    This simply means that these economies that are having their currency devalued, are going to have to "battle it out" on the global scale against other economies, so that they can maintain their competitiveness and not lose the relevance of their currency altogether.

    So, do you think that, in light of the onset of a "currency war", along with other global changes, that the Yen will still be competitive?

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  2. Onionman

    Onionman Senior Investor

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    I guess you've got to look at where the currency has come from. The yen was unnecessarily strong versus the dollar for a number of years. Put another way, you would have assumed that the economy had been really strong for the level of strength the currency had. But that was clearly not the case. It was simply a reflection of excess buying of short-term Japanese debt domestically. Maybe we're getting closer to where the currency should be.
     
  3. Roxcon

    Roxcon Member

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    The Yen probably won't be competitive following the possible currency war, if only for a time. It's really dropped in value the past few months and I can't see it picking back up very easily.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I've had small short positions against yen and euros recently, and I've also used a little yen and euros (originally bought with USD) to buy a little more gold, silver, and crude exposure.
     
  5. AtlantaSports

    AtlantaSports Senior Investor

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    It's difficult to speculate where the yen will be in the future, but really, it seems like it is going to be of virtually no value in the next decade or so.
     
  6. AtlantaSports

    AtlantaSports Senior Investor

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    I agree with this. I don't know how much of a comeback it could make in the first place.
     
  7. Nujabes

    Nujabes Member

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    There was a time in which yen was competitive, but that was a little before my time. Nowadays, they've just taken a fall. I feel like it's due to the fact that Japan, more often than not, keeps to itself. And with this lack of globalization and cross-internationalization, the only place where yen really means something is within Japan itself. They have shops there in which good clothing can only be 300 yen at a phenomenon that western countries call "harajuku shops". Heck, 300 yen in USD as of the time I'm posting this only converts to 2.4450 US Dollars!.
     
    Last edited by a moderator: Jul 8, 2016
  8. pwarbi

    pwarbi Senior Investor

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    He yen is obviously struggling at the moment and has been for some time in fact. What people thought might just be a little slump, or just the currency levelling itself out, has turned turned into a massive slide instead.

    If the currency keep a going the way it is, then there's no way it will be able to recover, so I do see some sort of intervention coming soon. What that will be though we'll have to wait and see.
     
  9. asbrown

    asbrown Member

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    I haven't seen many positive indicators come out of Japan in recent years to suggest economic fundamentals are getting any better. If we do see intervention from a central bank level, I doubt it would be very sustainable.

    In south east Asia is the yen really that important a trading currency? If the weakening leads to some drop in exports to Japan, I could see some trouble, but if Chinese economic demand increases then it could easily pick up the slack.
     
  10. Investor

    Investor Well-Known Member

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    Ahhh, I appreciate your perspective! I've never really thought about it from that approach. It would take an in-depth analysis for us to truly come to terms with what the root cause of the "fall-back" on the Yen is. I do think, though, that--as you have posited--if the sudden rise of the Yen at the time it did rise, was a reflection of the strength of the Japanese economy, then they would have that same strategy that took them there, to rely on.
    The sudden fall now demonstrates that there is a gap in the approach that was enforced by that economy in securing its "supremacy" and that that strategy will no longer work in today's global economy, and with serious investments and international economic competition the way it is.
     

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