Heading for ¥75 to $1 US Dollar

Everyday, first thing I do when I wake up is to turn on my computer and check the stock market and the yen vs. dollar rate. 


For this last week or so, the yen has been hovering around ¥76.8 yen to $1 US dollar. Every time the yen has gotten strong, until now, the Japanese government has thrown massive amounts of money away in vain attempts at intervening to stop the yen's rise. And every time they've done this they have failed, yet they keep doing it over and over.


 I wrote in "Japanese Government: These People Are Just Plain Nuts":

They intervened in the yen at ¥76.9, spending some $50 billion dollars. The yen rose to over ¥80 to the US dollar. Now, today, exactly one week later, we're right back where we started. The yen today, as of 4:11 am August 11, 2011 Japan time, is at ¥76.81... 

Now they are considering doing this again!? What is wrong with these stupid people?

Since, at that time, the Japan Central Bank (JCB) claimed it was "watching the market and would act accordingly" I have been expecting to see the yen jump back to ¥80 to $1 US Dollar over this past week or so.

It hasn't happened.

Now, Bloomberg says that some clown nick named, "Mr. Yen" (a former finance minister says the yen could hit ¥75 to $1 US Dollar soon.

From Japan's Mr. Yen Says Currency May Exceed 75 Per Dollar on US Weakness 

Japan’s currency may strengthen to a postwar high against the dollar because of the weakness of the U.S. economy, said former Finance Ministry official Eisuke Sakakibara, who’s known as “Mr. Yen.”

“The yen may appreciate further, beyond 75,” Sakakibara said in an interview from Tokyo on Bloomberg Television today. “I would expect the U.S. economy to be fairly weak for a long period of time.”

The yen declined today after Finance Minister Yoshihiko Noda warned that he’s ready to intervene again to stem gains that pose a risk to exports. On Aug. 4, the government sold the currency to stem gains that threaten exporters’ profits. The yen has since returned to its pre-intervention level and is approaching its all-time high of 76.25, underscoring the difficulty authorities are having in halting its advance.

“Intervention, in order to be effective, needs to be persistent and continuous and needs to have the understanding” of other authorities, said Sakakibara, who earned the nickname because of his efforts when an official to influence the yen rate through verbal and actual intervention in currency markets. “Multilateral intervention does work but I don’t think at the moment the U.S. is willing to intervene. It will be very difficult to have a coordinated intervention.”

He says, “Intervention, in order to be effective, needs to be persistent and continuous and needs to have the understanding” of other authorities...!? Now do you understand why I call this guy a clown? When has intervention ever been effective for more than a few weeks?

I've written many times about how these fools never learn.

OK, mister high and mighty "Mr. Yen" let's look at what your yen interventions have done since 1996 to today. They say a picture speaks a thousand words, so I'll just show a graph:

CLICK ON IMAGE FOR LARGER VIEW

In 1996, the average yen to dollar rate was about 106 yen to $1 USD.

Today it is ¥76.82 per $1 USD - about a 30% increase in the yen. I suppose this says volumes about how effective these interventions to weaken the yen have been.

I'm sure we will hit ¥75 to $1 US Dollar... The question is how many more interventions and wasted tax monies do the Japanese public have to suffer  before that happens?

Japanese Central Bank Throws Away a Billion Dollars Again

This morning when I woke up I checked the financial markets, gold, silver and, of course, the dollar yen rate.


I was somewhat surprised to see the yen at ¥76.9-something to the US dollar. A hour or two later, the yen had dropped to its current ¥78.9 per US dollar. Obviously the Japanese Central Bank intervened and bought a bunch of dollars.


Fools. When will they ever learn? They keep throwing our hard earned tax money down the drain to stop the yen's rise, but it is all in vain as the yen's appreciation continues. 


Market Watch reports:


Japanese Finance Minister Yoshihiko Noda confirmed the government acted alone to curtail the yen’s rise, unlike in March, when local authorities acted in concert with their counterparts from the Group of Seven leading economies to keep the yen 
from appreciating further.


Why do these fools keep doing this? When will they ever learn that these interventions cannot and will not stop any long term trend? The next part of the article is laughable:

Still, many analysts were skeptical that the actions could keep the yen anchored beyond the short term.

“We don’t believe today’s action will explicitly change the trend of the [dollar-yen rate],” economists at The Royal Bank of Scotland wrote in a note to clients.

“As long as concerns for the downside risks in the U.S. economy and expectations for the [Federal Reserve’s] further easing measure persist, it is hard to expect the [dollar’s rate against the yen] to return to high enough levels to alleviate the negative pressure on exporters’ earnings,” they said.

Gee, you think that, after decades of this sort of failed action repeated over and over that these analysts would figure it out? Gee... I guess they really go out on a limb and stick their necks out when they make statements like, "We don't believe today's action will explicity change the trend." 

What!? After decades of this sort of action and the inevitable failures of those actions, why is it  difficult to say straight out that "this Bank of Japan intervention will fail like all the others have before it."

There I said it. Am I an economic hero or what?