Hacker News Reader

Comment by xenospn | Hacker News Reader

If you’ve ever wanted to visit Japan, now’s the time. The entire country is on sale!

The exact opposite is true.

The sale was triggered partly because Japanese yen strengthened significantly. It's now more expensive to visit Japan.

Yes, yen is stronger versus the US dollar. However, the rates are still very good, especially when viewed over the past ten years.

https://www.xe.com/currencycharts/?from=USD&to=JPY&view=10Y

Yes, in fact I am in Sapporo right now, SapporoChris. I was earlier in Okinawa when the rates were still 160 yen to the dollar, but the current conversion is not bad either.

Still much cheaper than 5 years ago

Well, except with all this panic, the Yen is gaining against the USD, i.e. the "sale" is less good these last few days.

Not sure why, maybe it's because people are dumping USD, and buying Yen as a safe-haven currency?

The consensus seems to be that the gain is caused by the Bank of Japan raising rates on July 31, hinting at more raises. Yen has had historically low near-zero rates, so this raise strengthened their dollar.

On top of that, many traders were involved in a "Yen Carry Trade". Meaning they were borrowing Yen (because of the near-zero rates which beat out the 5% USD rates) and were using it to trade equities, crypto, whatever.

When the Yen started gaining against the dollar, these traders were actually losing money (since they were short Yen due to their Yen-denominated debt). This caused an unwind, meaning the traders wanted to close their positions (sell their equities, crypto, whatever) and buy back Yen to repay their debt, which pushed the Yen up further.

That, plus the trade was highly leveraged, so when yen rates went up the traders were asked to provide more margin. To meet the extra margin required they needed to unwind at least some of their position.

The exchange rate story doesn't sit well with me, wouldn't you simply hedge the fx risk?

My impression from these past few days has been that the US will also cut the rate soon, so you’ve got convergence from both directions.

Vs 3-9 months ago, incorrect.

Vs anytime previous to that within the last 2 decades, correct...

It’s so funny to me how confidently incorrect this comment is.

It’s not entirely wrong even though there has been a 12% change the last month or so. The Yen is still historically cheap VS USD. Last time I was there you got like 110¥ for 1$. It’s around 140¥ today. But yeah, going there a few months ago would have been better.