Attention | Japan’s exchange rate collapse!

Japan's exchange rate has almost collapsed. Japan's GDP fell 1.1% in the fourth quarter, and nominal GDP fell from third in the world to fourth in the world, overtaken by Germany.

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The exchange rate has plummeted! Officials gave them serious warnings


Since December, the yen has fallen below 151 from 140, or around 8%, the worst performing of any non-US currency.


Two days before the festival, the yuan has risen and risen against yen, with the highest RMB being 20.944 yen.




On February 15, the yen briefly hit the 150.5-150.9 yen against the dollar, falling below the 150 level again since November, nearly reaching the peak of last year.




The move triggered a series of verbal warnings from Japanese officials, especially from Japan's chief foreign exchange officer Renita Kanda and Finance Minister Toshiichi Suzuki.


Kanda told reporters: " Some of the recent rapid changes in the yen exchange rate are based on fundamentals, but some of the exchange rate changes are obviously speculative, and I think the latter is not desirable. We are ready to respond 24 hours a day, 365 days a day."


It was his toughest comment on the yen since November.



GDP fell out of the top three in the world!


According to preliminary statistics released by the Cabinet Office, Japan's real gross domestic product (GDP) grew by 1.9% year on year in 2023, with the nominal GDP growth rate reflecting price increases was 5.7%.


The preliminary statistics of Japan's GDP in 2023 are 591.482 trillion yen, or about $4210.6 billion, lower than Germany's $4,456.1 billion.


According to Japanese TV, Japan's nominal GDP dropped from third in the world to fourth in the world, and was overtaken by Germany.




Data show that Japan's annual GDP growth rate was minus 0.4% from October to December 2023, with negative growth for two consecutive seasons.


In October 2023, the International Monetary Fund predicted that Japan's nominal GDP would be overtaken by Germany to fall to the fourth place in the world.


Japan's former minister of Economy, industry and Industry, said that "Japan's growth potential is indeed lagging behind and remains depressed." Nishimura said Japan hopes to use a package to regain the economic status it has "lost" in the past 20 or 30 years.


According to Japan's Mainichi Shimbun, Japan's status as an "economic power" has been challenged with the pursuit of emerging countries. The report said that this is not only because of the depreciation of the yen, but the economic growth rate as the population declines, which is a structural problem Japan is facing.


The Japanese government is deeply in crisis. Japanese Prime Minister Fumio Kishida has actively promoted the formulation of the Future Strategy for Children, which is a guideline for having fewer children.


In recent years, the Japanese government has formulated large-scale economic stimulus policies, but with little effect, resulting in a high debt.


However, in the face of increasingly severe fewer children and aging, it is not easy to improve the low level of labor production efficiency.


Nihon Keizai Shimbun believes that both Japan and Germany are aging, and the economic downward pressure caused by the lack of labor force is huge. In order to accelerate growth again, it is necessary for Japan to continue to tap the potential of elderly workers by thoroughly realizing equal pay for equal work. In addition, it is also important to further attract foreign investment.



To be overtaken by India?


The IMF expects Japan's next "overtaking" to soon come: India will become the world's fourth largest economy by 2026, while Japan's GDP will fall again to become fifth in the world.


According to Goldman Sachs, Japan will fall to the 12th place in the world by 2075, beating countries such as Indonesia, Brazil and Nigeria.


If the forecast comes true, it would be like pouring cold water on the Japanese economy, which is already struggling.

Post time: Feb-20-2024