International News

The yen exchange rate hits a 34-year low

Author : Bozhou Marine

Update time : 2024-04-12 13:32:05

After the yen fell to its lowest level against the U.S. dollar since 1990, Masato Kanda, Japan's deputy finance minister for international affairs, gave the latest warning on Thursday (April 10) that the authorities will consider all changes in the foreign exchange market. Choose and be ready for any event.

Japanese officials have frequently released intervention signals in recent days. According to the Wall Street Journal, Fumio Kishida publicly stated that the Japanese government is paying close attention to foreign exchange trends and believes that excessive fluctuations are unacceptable. "We hope to take appropriate countermeasures against excessive volatility and we will not rule out any policy options," Kishida said.

He also said that he would cooperate with the Group of Seven (G7) to deal with exchange rate issues, noting that the G7 had stated that disorderly fluctuations in the yen exchange rate could have a negative impact on the global economy.

Previously, Japanese Finance Minister Shunichi Suzuki also publicly warned that he would take "resolute action" to intervene in the currency market.

However, market participants believe that as the interest rate gap with the United States is still too wide, even if Japanese officials adopt intervention measures, it will be difficult to be fundamentally effective, and the outlook for the yen's trend is still not optimistic.

It is worth noting that international capital is aggressively shorting the yen. According to the latest data released by the U.S. Commodity Futures Trading Commission, in the week ended April 2, the net short position of yen held by global hedge funds and asset managers rose to 148,388 shares, the highest level since January 2007. .

The number of bankrupt companies has increased significantly

According to Xinhua News Agency, a report released on the 8th by the Tokyo Shoko Research Institute, a Japanese private enterprise credit survey agency, showed that as the preferential loans issued by the government during the COVID-19 epidemic gradually expired, the financial situation of some enterprises deteriorated. In fiscal year 2023 (April 2023) By March 2024) the number of bankrupt companies in Japan has increased significantly.

The report said that in the last fiscal year, the number of bankrupt companies in Japan with debts exceeding 10 million yen (approximately 152 yen for 1 U.S. dollar) increased by 31.58% year-on-year to 9,053, and the total liabilities of bankrupt companies exceeded 2.46 trillion yen.

The report shows that the total liabilities of bankrupt companies have increased year-on-year for two consecutive years. In fiscal year 2023, bankrupt enterprises were mainly small and medium-sized enterprises with fewer employees, and the number of bankrupt enterprises in the 10 industries counted increased year-on-year.

Relevant analysis points out that the main reason for the sharp increase in the number of bankrupt companies is that starting from 2023, the interest-free and unsecured loans issued by the Japanese government during the COVID-19 epidemic have entered a concentrated repayment period, and many small and medium-sized enterprises with poor performance have been overwhelmed. In addition, factors such as rising prices and higher wages in response to labor shortages have also significantly increased business operating costs.

The report said that since the interest-free and unsecured loans provided by the Japanese government to small and medium-sized enterprises during the epidemic will reach a repayment peak after April this year, it is expected that the number of companies with capital turnover difficulties will continue to increase.

Increased economic growth in the fourth quarter of last year

The Japanese Cabinet Office released a secondary statistical report on March 11, which revised Japan's real gross domestic product (GDP) growth rate slightly upward to 0.1% in the fourth quarter of 2023, and the annual growth rate was 0.4%.

The Japanese government usually releases two reports on quarterly economic data. Preliminary statistical results released by the Cabinet Office in February this year showed that Japan's real GDP fell by 0.1% in the fourth quarter of last year from the previous quarter and by 0.4% on an annual basis, marking two consecutive quarters of negative growth.

The secondary statistical report reflects the latest data such as the recently released corporate statistics. The report shows that corporate equipment investment was revised from the previous month-on-month decrease of 0.1% to a month-on-month increase of 2%, which is the main reason for the increase in economic growth. However, personal consumption, which accounts for more than half of Japan's economy, was further revised down from a month-on-month decrease of 0.2% to a decrease of 0.3%. In addition, private inventories, government consumption and public investment all declined slightly.

The report maintains the preliminary statistical result of Japan's real GDP growth of 1.9% in 2023 unchanged.

Economists said that this report's upward revision to Japan's economic growth in the fourth quarter of last year was smaller than expected, mainly because the decline in personal consumption expanded. Affected by factors such as the shutdown of some Toyota automobile plants due to the counterfeiting scandal and the Noto Peninsula earthquake, the possibility of negative growth in the Japanese economy in the first quarter of this year still exists.

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