2023 has been a year full of uncertainties and challenges, with the international financial market experiencing unprecedented turbulence and volatility. Among them, the most notable is the sharp exchange rate of the yen** and the close cooperation between the Bank of Japan and the US Federal Reserve. Do these two factors mean that the Japanese central bank and the United States have carried out a "harvest" against other countries? What are the economic and financial implications for China and other emerging market countries?
The yen exchange rate is one of the important indicators of the international financial market, which reflects the strength and international competitiveness of the Japanese economy, and also affects the global capital flow and settlement. In 2023, the yen exchange rate has seen a significant **, from 110 yen per dollar at the beginning of the year to 150 yen per dollar at the end of the year, hitting a record low.
Japan's economic growth is sluggish, domestic demand is insufficient, exports are affected by global frictions and the new crown epidemic, fiscal deficits and debt levels remain high, resulting in the deterioration of the fundamentals of the Japanese economy and the loss of its attractiveness to foreign investment.
In order to stimulate the economy, the Bank of Japan implemented an ultra-loose monetary policy, printing a large amount of money and buying government bonds, which led to a surplus of yen, currency depreciation, and lower interest rates, forming an environment of negative interest rates, which made the return on investment of the yen decline and lose its attractiveness to investors.
In response to the impact of the new crown epidemic, the US Federal Reserve also implemented an accommodative monetary policy, significantly reduced the federal ** interest rate, expanded the balance sheet, and provided dollar liquidity to the world, which increased the demand for the dollar and the exchange rate rose, forming an exchange rate difference with the yen, prompting investors to switch from the yen to the dollar.
There is a close working relationship between the Bank of Japan and the US Federal Reserve, which has jointly maintained the stability of the exchange rate of the US dollar and the Japanese yen, avoided excessive volatility and shocks, and provided economic and financial support for both countries. However, this cooperation also means that the Bank of Japan has abandoned the initiative to regulate the yen exchange rate, but has complied with the wishes of the United States, making the movement of the yen exchange rate more dependent on the movement of the dollar.
The yen exchange rate has a profound impact on the international financial market, the yen exchange rate makes Japan's export products cheaper, improves Japan's export competitiveness, and has an impact on the exports of other countries, especially the manufacturing industry of China and other Asian countries, causing a deficit and industrial transfer pressure.
The yen's exchange rate has made Japan's imports more expensive, increased Japan's import costs, negatively affected Japan's energy and raw material imports, and also posed a threat to Japan's inflation level and living standards. The yen exchange rate has shrunk Japan's overseas assets and income, reduced Japan's balance of payments and international reserves, weakened Japan's international influence and discourse, and reduced Japan's position in the international financial system.
The yen exchange rate has caused an impact on Japan's financial market, and Japan's ** and bond markets have fluctuated sharply, and Japan's financial institutions and investors have suffered losses, which has also triggered financial risks and instability, and has had a contagion effect on the global financial market.
It is a popular view that the cooperation between the Bank of Japan and the US Federal Reserve is a deliberate strategy to use the ** of the yen exchange rate to carry out a "harvest" on other countries in order to gain benefits and advantages.
The Bank of Japan and the U.S. Federal Reserve Board have a long history of cooperation, and the two sides have close communication and coordination in monetary policy, exchange rate policy, financial supervision, etc., forming a kind of "central bank alliance" relationship, jointly maintaining the exchange rate stability of the US dollar and the yen, and also protecting the economic and financial interests of the two countries.
The Bank of Japan and the U.S. Federal Reserve have common interests, both hope to stimulate economic growth, ease deflationary pressure, increase employment rate, increase consumer confidence through loose monetary policy, but also hope to reduce the debt burden, increase fiscal space, and support the best fiscal policy through a low interest rate environment.
The cooperation between the Bank of Japan and the U.S. Federal Reserve mainly uses the global liquidity of the U.S. dollar to influence global capital flows and assets** through the cyclical changes of the U.S. dollar tide, so as to harvest global wealth and profits in the process of repatriation of the U.S. dollar.
The baton of the dollar tide is the Fed's interest rate hikes and interest rate cuts, once the Fed enters the interest rate cut cycle, it will release a large amount of water to the world, stimulating the global economic boom and asset bubbles, and once the Fed enters the interest rate hike cycle, it will tighten the dollar liquidity, triggering a global economic crisis and asset collapse, so as to achieve a big harvest.
The U.S. aircraft carrier battle group is a symbol of U.S. maritime hegemony and an extension of U.S. interests and influence in the world.
The exchange rate of the yen and the harvest of the Bank of Japan and the United States have caused huge shocks and challenges to the international financial market, and also exposed the unfairness and instability of the international financial system.
In order to cope with this situation, the international financial market needs to make some necessary responses and adjustments, mainly including improving the diversity and inclusiveness of the international financial system, breaking the monopoly and hegemony of the US dollar, promoting the internationalization and multilateralization of multiple currencies, and increasing the choice and competition of the international financial market, so as to reduce the influence and risk of the US dollar and improve the fairness and efficiency of the international financial market.
A diversified and inclusive international financial system can promote global economic cooperation and development, reduce global financial conflicts and crises, and create more favorable conditions for the stability and prosperity of international financial markets.
It is necessary to improve the supervision and coordination of the international financial market, establish an open and transparent international financial supervision mechanism, strengthen communication and cooperation between central banks and financial institutions of various countries, and formulate and implement some common international financial rules and standards, so as to prevent and curb the abuse and harvesting of the US dollar and maintain the order and security of the international financial market.
The regulation and coordination of the international financial market can protect the financial sovereignty and interests of all countries, enhance the financial trust and mutual assistance of all countries, and provide a stronger guarantee for the health and sustainability of the international financial market.
The ** of the yen exchange rate and the harvest of the Japanese central bank and the United States are a major focus and problem in the international financial market in 2023, which reflects the imbalance and imperfection of the international financial system, and also affects the stability and development of the international financial market.
In order to cope with this situation, the international financial market needs to make some necessary responses and adjustments, improve the diversity and inclusiveness of the international financial system, and improve the supervision and coordination of the international financial market, so as to establish a fairer, more stable, more effective and more dynamic international financial market, promote global economic cooperation and development, and achieve a win-win and shared international financial order.