I don’t see the yen “blowing up”


An excerpt from a post I made in January 2013, and not dissimilar to what I’ve said in times past or believe today. I included some present day comments in brackets.

I don’t see the yen “blowing up” — it’s not as simple as some may wish [initials K.B.] or have been led to believe [initials J.M.] to see a currency like the yen or a country like Japan “blow up” in a straight line. Beware macro pontification coattailing [did I coin a term?]. The great 2005 Nikkei rally saw a roughly 10% weakening of the yen. Overnight [15 Jan 2013], Economy Minister Akira Amari warned excessive yen appreciation (typo: depreciation) may benefit exporters but would hurt people’s livelihoods. The business press is concluding Minister Amari as having suggested the yen has weakened enough. In fact, too weak of a yen begins to hurt exporters if materials costs don’t start to decrease. In this sense, the input environment is quite different than ’05; ditto the strength of the global economy now vs. then. [e.g. crude oil ~$100/bbl these days; Friedman’s The World is Flat was published in 2005]