Japan’s currency is so weak because exporters have lost their competitiveness
It was a brutally honest article but I have seen more brutal articles coming from Japanese experts. I understand that you hold your firepower because you want to save faces for the Japanese.
Great article. Reminds us all, especially the “finance heavy” crowd of which I am a member, that the real economy is what ultimately drives FX rates and not pure financial flows. Remembering Japan in the 80’s when we in the US thought (like today with China) that Japan was going to eat our lunch, Japanese products were perfect and understandably commanded premium prices. No longer the case. Sadly the 30 years of enforced belt tightening has made Japanese focus on lowering costs to the detriment of innovation. So over time that resulted in driving costs down but sacrificing new ideas. Change comes to Japan in a seismic fashion. Something big has to happen to move the natural torpor of the population, especially an aging one. Let’s see what it will be this time?
Thanks for providing your perspective--especially on the "free side" of a paywall. As a long-term resident of Japan now with permanent residency status and the intention to remain based in Japan forever, I read your prognosis with great interest. I tend to share your viewpoint, but I am still weary of not hedging my bets for a return to the days of a much stronger yen vs. the USD. Although I spent a few "tours of duty" living and working back in my native Chicago, I have lived in Japan during periods when the fx was right around current levels as well as when it was as high as 80 yen/USD. Especially considering the effect of demographics and the factors you cited, it does seem unlikely that Japan, Inc. will ever again be able to export its way out of a weak yen. It's just difficult to fathom the likelihood that Japan's economy (and the relative value of the yen) will simply deteriorate slowly during the rest of my days here. Glad to be invested heavily in the US stock market!