Mar
17th
Thu
17th
USDJPY Conundrum
Yesterday the yen reached the postwar record high against the dollar.
Yet, Japan’s budget deficit is higher than tax revenues, before accounting for the recent tragedy. They are spending more than twice what they can afford, with the rest being borrowed or soon to be fully monetized by Japan Central Bank.
How suddenly the flight to safety into the yen will transform into a currency crisis will be shocking to most. A couple of interesting links from the FT: FT.com / Markets - Yen strength is likely to prove short-lived and Japan’s megabond tremors.
