I live in Japan and five years ago my drinking buddy at the time only had USD and was about to get on the shinkansen. He needed Yen ASAP. So he said, "dude I'll trade you a 100USD for 10000YEN." At the time it was an easy fifteen bucks or something profit after exchange, so I said, sure, here ya go.
I put it in a drawer and forgot about it until a few weeks ago. I'm going to the moon with this, ladies and gentlemen
He literally put 100USD in front of me, said he forgot to get more yen before his trip, and asked for a favor. Am I really in the wrong from your perspective?
It might have been a gift by his friend. You don't know the details, maybe the friend is more affluent, maybe op had already let him stay in his apartment and given him food and this was the friends covert attempt to even the scale without directly offering money.
In 2021, USD to JPY exchange rate ranged from ~102 to ~115, and the average was ~109. The actual exchange rate could be a bit less depending on where you make the exchange, so 100 USD to 10000 JPY doesn't seem like that much off.
(For example, I noticed that if I buy something from Amazon or try to pay for something using Paypal, the exchange rate they offered me is consistently worse than the market rate if I elect to pay with USD instead of JPY. The difference often adds up to a few dollars, even accounting for foreign transaction fees that my bank might charge.)
You mean the cost of a couple of beers at the end of the day?
OP clearly stated the situation was of a mutual benefit - friend got their Y now and don't need to bother with doing an exchange, OP got a few spare bucks which was a such big sum what it literally sat in the drawer for 5 (five) years.
It's not that simple. Untold numbers of U.S. bonds are held by people running the "carry trade" (borrowing JPY at low interest rates in order to buy mostly U.S. treasuries and make money on the difference).
If you raise JPY rates, then these U.S. treasuries are going to get liquidated driving up U.S. rates and of course the U.S. doesn't like that.
So, I believe the US is pressuring Japan NOT to raise rates, i.e. to save the U.S.'s own currency.
This is undoubtedly why Bessent bought $5 to $10 billion JPY using Euro awhile back (as rumored, the exact amount is a secret). That way he could try and bailout Japan and by using Euro instead of USD, not affect US inflation so much. He also did it without telling anyone in Europe which quite pissed them off as well.
It's really funny seeing these shenanigans take place with all the pompousness the US shows regarding its currency and how it pretends it itself is not going broke.
It’s true that the carry trade unwinding suddenly would be…traumatic (and debatably the root cause of the rate spike that killed SVB a few years ago), but it could be managed gradually, and must be done to bring Japan back from the brink.
> So, I believe the US is pressuring Japan NOT to raise rates, i.e. to save the U.S.'s own currency.
The US is pressuring the BoJ not to liquidate US debt to get the USD needed to buy Yen. It only tangentially relates to bond yields, and has nothing to do with defending the USD.
It would be better for the US if Japan just normalized rates, but Japanese politicians are resistant.
More detail on the Patrick Boyle video where the actual picture of Bessent's note that included that purchase is mentioned. Also the fact that these are specifically French bonds that were dumped with no warning. This is dropping the mask of Western solidarity I think Xi is over the moon
They can't afford to. At 4.5% average rates, their interest payments will consume something on the order of 80% of their government budget and huge portions of GDP. Their 30 year paper was trading at 4.1% last week. If the short end of the yield curve pumps even higher, they are utterly screwed. Consequences of 250% debt to gdp.
Well, hopefully they’ve been smarter than the US about managing bond duration, but yeah. Doesn’t change reality in the currency markets, and sometimes you have to choose between the devil and the deep blue sea.
The US has the same problem. Maybe less extreme, but the balance sheet has tons of short-term debt, and rates aren’t cooperating.
It’s pointless. Setting money on fire
to avoid the inevitable.
Since Bessent did what he did the whole issue has been swallowed up in the idiotic partisan maw of US politics, but it’s just a self-defeating effort by Japan to fight the market.
Current moves have been to implode all currencies, but peg the dollar to petrol, so it floats slightly higher on the pile.
The only ways to pay back 120%+ GDP is hyper-inflation or a debt jubilee. Given the South Seas company debt interest is still being paid back, doubt it will be the latter.
Because that was 1985, and this is now. Entire supply chains, input costs, planning, etc. have been built around the assumption of the JPY trading in some sort of range.
Of course that will change over time, if it hasn't already. The Japanese government's messaging about this has been that they're not really worried about the currency weakening (after all they're massive net exporters! it should be a good thing), but rather the speed at which it's happening.
USD is falling vs euro so EURJPY is even more bleak. USD in general during those times was way stronger than it is today so those numbers are meaningless.
Because you cherry-picked 1985. It went below 160:1 in 1986 and hasn't been back since, until now. So it's the weakest it's been in literally 40 years; that's at least potentially a big deal.
I live in Japan and five years ago my drinking buddy at the time only had USD and was about to get on the shinkansen. He needed Yen ASAP. So he said, "dude I'll trade you a 100USD for 10000YEN." At the time it was an easy fifteen bucks or something profit after exchange, so I said, sure, here ya go.
I put it in a drawer and forgot about it until a few weeks ago. I'm going to the moon with this, ladies and gentlemen
It used to be the rule of thumb - 1 dollar - 100 yen.
I guess it still is - it just went from 1 USD to 1 AUD to now 1 NZD :-D
I still do that in my head-- minus two zeros. But nope, not even close now. It was a habit for so long, it's hard to correct...
Diamond hands pays off at last, congrats on the windfall!
Who charges their buddy 15 USD exchange fees on 100 USD? :(
He literally put 100USD in front of me, said he forgot to get more yen before his trip, and asked for a favor. Am I really in the wrong from your perspective?
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That's the wrong read. It's more that it's easy to understand. "I will give you a 100 dollar bill, please give me a 10,000 yen bill."
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It might have been a gift by his friend. You don't know the details, maybe the friend is more affluent, maybe op had already let him stay in his apartment and given him food and this was the friends covert attempt to even the scale without directly offering money.
In 2021, USD to JPY exchange rate ranged from ~102 to ~115, and the average was ~109. The actual exchange rate could be a bit less depending on where you make the exchange, so 100 USD to 10000 JPY doesn't seem like that much off.
(For example, I noticed that if I buy something from Amazon or try to pay for something using Paypal, the exchange rate they offered me is consistently worse than the market rate if I elect to pay with USD instead of JPY. The difference often adds up to a few dollars, even accounting for foreign transaction fees that my bank might charge.)
This is the kind of handwringing over $100 ethics I come to HN for!
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You mean the cost of a couple of beers at the end of the day?
OP clearly stated the situation was of a mutual benefit - friend got their Y now and don't need to bother with doing an exchange, OP got a few spare bucks which was a such big sum what it literally sat in the drawer for 5 (five) years.
The BoJ has to raise rates. Dumping Dollars to buy Yen is spitting in the wind.
It's not that simple. Untold numbers of U.S. bonds are held by people running the "carry trade" (borrowing JPY at low interest rates in order to buy mostly U.S. treasuries and make money on the difference).
If you raise JPY rates, then these U.S. treasuries are going to get liquidated driving up U.S. rates and of course the U.S. doesn't like that.
So, I believe the US is pressuring Japan NOT to raise rates, i.e. to save the U.S.'s own currency.
This is undoubtedly why Bessent bought $5 to $10 billion JPY using Euro awhile back (as rumored, the exact amount is a secret). That way he could try and bailout Japan and by using Euro instead of USD, not affect US inflation so much. He also did it without telling anyone in Europe which quite pissed them off as well.
It's really funny seeing these shenanigans take place with all the pompousness the US shows regarding its currency and how it pretends it itself is not going broke.
It’s true that the carry trade unwinding suddenly would be…traumatic (and debatably the root cause of the rate spike that killed SVB a few years ago), but it could be managed gradually, and must be done to bring Japan back from the brink.
> So, I believe the US is pressuring Japan NOT to raise rates, i.e. to save the U.S.'s own currency.
The US is pressuring the BoJ not to liquidate US debt to get the USD needed to buy Yen. It only tangentially relates to bond yields, and has nothing to do with defending the USD.
It would be better for the US if Japan just normalized rates, but Japanese politicians are resistant.
5 replies →
More detail on the Patrick Boyle video where the actual picture of Bessent's note that included that purchase is mentioned. Also the fact that these are specifically French bonds that were dumped with no warning. This is dropping the mask of Western solidarity I think Xi is over the moon
Many Japanese enterprises have a lot of debt because the interest rate was so low. Raising interest rates would be a significant problem.
They can't afford to. At 4.5% average rates, their interest payments will consume something on the order of 80% of their government budget and huge portions of GDP. Their 30 year paper was trading at 4.1% last week. If the short end of the yield curve pumps even higher, they are utterly screwed. Consequences of 250% debt to gdp.
Well, hopefully they’ve been smarter than the US about managing bond duration, but yeah. Doesn’t change reality in the currency markets, and sometimes you have to choose between the devil and the deep blue sea.
The US has the same problem. Maybe less extreme, but the balance sheet has tons of short-term debt, and rates aren’t cooperating.
Do you mean BoJ? JCB is a credit card company. It's expected for the BoJ to raise the rate to 1.25% in 2 weeks.
Yes, my bad. I got in the bad habit of referring to it like the ECB.
> It's expected for the BoJ to raise the rate to 1.25% in 2 weeks.
Cool. Only like four hundred basis points to go!
TGA account has around $1T in it. So, Bessent has enough ammo to defend the castle of Japan.
It’s pointless. Setting money on fire to avoid the inevitable.
Since Bessent did what he did the whole issue has been swallowed up in the idiotic partisan maw of US politics, but it’s just a self-defeating effort by Japan to fight the market.
Unless Japan raises interest rates or tightens fiscal spending, no amount of intervention will work as long as the structural problems remain.
Defending currency has to have some quip, right? Something like, "The market can remain honest longer than your central bank can stay solvent"?
Always seems to go wrong. Like spraying water on a forest fire with a straw.
if we all pile in, itll be bank of england redux
Current moves have been to implode all currencies, but peg the dollar to petrol, so it floats slightly higher on the pile.
The only ways to pay back 120%+ GDP is hyper-inflation or a debt jubilee. Given the South Seas company debt interest is still being paid back, doubt it will be the latter.
Fantastic as someone looking for an affordable vacation destination.
It’s been in this range for a year or so and flight prices and hotel prices still suck for most people.
The environment is being destroyed and all we can think about is taking another flight.
Time to sell some bonds!
In 1985, USDJPY was around 250:1, why 160:1 is now a problem?
With almost all of its industries no longer in a leading position, with its car industry being demolished by EVs, 250:1 is what it is heading.
Because that was 1985, and this is now. Entire supply chains, input costs, planning, etc. have been built around the assumption of the JPY trading in some sort of range.
Of course that will change over time, if it hasn't already. The Japanese government's messaging about this has been that they're not really worried about the currency weakening (after all they're massive net exporters! it should be a good thing), but rather the speed at which it's happening.
Most large companies hedge their exposition to FX rates.
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USD is falling vs euro so EURJPY is even more bleak. USD in general during those times was way stronger than it is today so those numbers are meaningless.
I haven't checked USDEUR in years and it's exactly where it was last time.
In late 1945 the exchange rate was 360 yen to 1 dollar. If that was good in 1945 then it should be good in 2026 because nothing ever changes.
Because you cherry-picked 1985. It went below 160:1 in 1986 and hasn't been back since, until now. So it's the weakest it's been in literally 40 years; that's at least potentially a big deal.
Just buy the bottom and sell the top. Are they stupid?
This headline is outdated. It's at 159.82 yen / usd right now.
My spot trading news is invalid unless it uses 1s candles
It's not invalid. It's outdated. You don't have to look at the candles. You have to look at the current price.