Title: Why the Yen is Strong – Currency Thoughts
Headings: Why the Yen is Strong
Why the Yen is Strong
Content: Real GDP grew just 0.7% per annum in the 20 years between the second quarters of 1991 and 2011. Low short-term interest rates: The Bank of Japan’s target has not exceeded 0.5% for the past sixteen years. Poor fiscal metrics: The budget deficit will again exceed 8% of GDP this year, and gross debt of about 225% of GDP easily tops all G7 economies. Unattractive long-term bond yields: The 10-year JGB yield is currently 1.00% and has averaged 1.38% during the past ten years. A battered stock market: The Nikkei-225 closed today at 8,519, 78.1% below its record high of 38,916 at the end of 1989. That’s a six and three-quarters percent per annum rate of value destruction sustained over twenty-one and three-quarter years.