In the past few days, a very bad news has come that the yen is about to raise interest rates! What would be the impact on the world of a sudden change in monetary policy in a major economic country that has pursued zero interest rates for 30 years?
The biggest question is, is it the dollar or the renminbi that it kills?
According to Japan's Kyodo News Agency, people familiar with the matter revealed that Japan's ** is discussing officially announcing that the economy has overcome deflation, which marks a major shift after nearly 20 years of fighting prices.
At a meeting of the Budget Committee of the House of Representatives on February 22, Bank of Japan Governor Kazuo Ueda claimed that "the Japanese economy is inflationary, not deflationary," suggesting that the conditions are ripe for the lifting of negative interest rates.
For a long time, the Japanese economy has been in a cycle of suppressing corporate profits, hindering wage growth, and leading to the stagnation of private consumption, and the yen interest rate hike will be a sign of the transformation of the Japanese economic cycle.
There are various signs that the yen interest rate hike, which has been brewing in Japan for a long time, is about to start.
However, will the yen raise interest rates, will it kill the dollar or the yuan? Why such strange doubts?
At the moment, both claims seem to make perfect sense and have a lot of market.
The view that the US dollar interest rate hike is a counter-killing of the US dollar is that the US dollar is in a cycle of interest rate hikes, and the US bonds are at a critical moment, and the scale and volume of the yen capital market are enough to have a serious impact on the US dollar system and US bonds, thus giving the US debt crisis the final blow.
What is the rationale for this?
The long-term zero interest rate of the yen has caused a large amount of capital outflow from Japan, a considerable part of which has flowed into the US bond market, and in addition, the US dollar interest rate hike and the sharp rise in US bond yields have also caused US dollar capital to increase its holdings of US bonds.
At this time, if the yen suddenly raises interest rates, trillions of dollars of liquidity will be siphoned off from Europe and the United States, especially the capital outflow of yen and dollar in the US bond market, which will have a serious impact on US bonds.
Can this happen? Will the United States allow the Japanese to do such a thing?
The fact that the Japanese have been warming up since last year and have repeatedly hinted at raising interest rates but have been hesitant to do so may also prove the nervousness of the Americans and the timidity of the Japanese.
However, the United States has always followed the wishes of the Japanese to raise interest rates and has been pressing on the heads of others for a long time, and even if there is a strong force to suppress it, it will not be a solution to the problem after all.
If the dollar starts to cut interest rates, then there is no fear of a rate hike by the yen. But is the time not yet right, are Americans willing to cut interest rates now? Do they dare to cut interest rates now?
Another view is that the yen interest rate hike is to cooperate with the United States to intercept the yuan.
In this round of US dollar interest rate hikes, Americans are frantically siphoning out a lot of liquidity from the world, and the most important target is us. In our property market, ** and even in the manufacturing industry, a large amount of dollar capital has been siphoned off, and the losses are quite heavy.
Now that the US dollar has raised interest rates to the last moment, the last resort of the Americans is to raise interest rates with the yen, and finally draw a handful of liquidity, so that we can also withdraw the liquidity and investment of the yen here, then we will be even worse.
Is this kind of thing true? Will it happen?
Theoretically speaking, if the yen raises interest rates, it will objectively cause some yen capital to flow back to Japan, which is the same reason as the US dollar interest rate hike and the US dollar back to the United States.
However, the yen will not raise interest rates as violently as the dollar, and this repatriation will also be a long-term process.
In contrast, how long can the dollar's high interest rates last? If the yen raises interest rates in the middle of the year and the dollar cuts interest rates at the end of the year, the time difference is too short, I am afraid it will not have much effect.
We believe that if the yen raises the interest rate, it is also the Japanese who believe that the Japanese economic development needs to raise interest rates, neither for the dollar nor for the yuan, but they are catching up with the sensitive period of the dollar interest rate hike and the accelerated internationalization of the yuan.
In such a sensitive period, a major change in the monetary policy of the yen, one of the world's five largest currencies, will inevitably have a certain degree of impact on both the US dollar and the RMB.
However, even if the yen raises interest rates, it will be a moderate rate hike. After a long period of zero interest rates, the Japanese did not dare to take drastic measures abruptly. So, the effect is a mild effect in the long term, not a sharp shock in the short term.
So, will the yen's interest rate hike be the final blow to the already taut U.S. Treasury and the last straw that crushes it? There is indeed such a possibility, so the Americans tried their best to press the Japanese not to do it.
It seems that the Americans are much more nervous than we are on this issue.
So, we don't need to worry too much about the yen rate hike, just do our own thing.