Yen's rise stalled? Japanese media analysis selling pressure continues

When the yen briefly jumped to a high of Y139 against the dollar last week, there was an undercurrent behind the seemingly simple numerical movement, interwoven with the market's infinite reverie about the direction of Federal Reserve policy, deep concern about the outlook for the US economy and a profound reflection of the structural contradictions in Japan's domestic economy.

This brief exchange rate "binge" seemed like a collective market illusion, based on blind optimism that the Federal Reserve was about to cut interest rates aggressively. The fed's policy changes each time, both as an indicator of global financial markets, affects each participant's nerves. And this time, the market is in an almost urgent posture, urging the Fed to cut the flag, as if as long as the interest rate drop, it can solve all the economic gloom. However, this belief in "panacea" is ironic, it ignores the complexity and variability of economic laws, and also reflects the fragility and blindness of the market in the face of uncertainty.

More ironically, the yen's rise has also been partly fuelled by pessimism about the US economic outlook. The U.S. economy, once the engine in the world, and now has become a source of market concerns. Lackluster employment data, not only triggers the "law of Sam's alert, more let the market started to question the timeliness and effectiveness of the fed to cut interest rates policy. Against this backdrop, the yen's status as a safe-haven asset has been re-reinforced, and investors have rushed in to seek a bit of safety amid the turmoil. But how long can this fear-based appreciation last?

To make matters more complicated, movements in the yen's exchange rate are not explained by a single factor. Among them, the phenomenon of "structural yen selling persist, cannot be ignored as a reaction, limits the pace of yen appreciation. The fact that Japanese households are investing overseas through channels such as the new NISA not only reflects the lack of domestic investment channels, but also exposes the dilemma of the Japanese economy in the wave of globalisation, which is unable to fully wean itself off external markets while also struggling to create enough investment opportunities at home. This "structural yen selling" is undoubtedly a bitter satire on the structural problems of the Japanese economy, and it reveals the dilemma of Japan's wavering between globalization and localization.

And the Bank of Japan's change of heart has added some drama to the currency game. From an initial cautious rate rise to an explicit statement, the Bank of Japan appears to be trying to put a limit on the volatility of the yen. But such efforts pale in the face of powerful market forces. Speculators sell-off has been reduced, but their suspicion of future policy has yet to dissipate. Once the policy direction changes, the volatility of the yen exchange rate may intensify again.

In this currency game, market participants seem to be trapped in a cycle: they hope that the Federal Reserve rate cut will bring a temporary calm, but also worry that the United States recession will spread to the world; They both want to yen appreciation brings safety protection, and worry that "structural yen selling" will limit the appreciation of space. Such contradictions and entanglements not only reflect the complex and changeable market psychology, but also reveal the double-edged sword effect of global economic integration - while enjoying the convenience and opportunities brought by globalization, we must also face the risks and challenges brought by it.

However, in this seemingly complicated exchange rate game, people should perhaps be more aware that true stability and prosperity cannot be achieved by monetary policy adjustments or exchange rate fluctuations alone. They need to be built on a solid economic foundation, a sound industrial structure, and open and inclusive international cooperation. For Japan, how to find a balance between globalization and localization? How to promote economic structural transformation while maintaining market stability? These issues not only relate to its future economic development direction, but also affect the pattern and trend of the global economy to a certain extent.

There is perhaps no need to be too alarmed or too sanguine about the brief movements in the yen. It is both a natural consequence of market forces and a microcosm of the complexity of the global economy. What we can do is to remain rational and calm, draw lessons and inspiration from it, and be better prepared to deal with the challenges ahead.