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Bank balance sheet data show that yen lending to offshore financial centers and non-bank borrowers remains elevated, suggesting a large stock of yen-funded positions, see the first two charts. By contrast, speculative futures positioning has swung sharply, highlighting that carry trades can unwind quickly even as the broader yen-funded footprint remains in place, see the third chart.
*Signifying loss of market confidence? #Yen #Japan* **BoJ’s Policy Dilemma** | The Bank of Japan is caught in a "**pincer movement**": > - **If they keep rates low:** The Yen will continue to crash against the US Dollar (currently near 160), destroying the purchasing power of Japanese households. - **If they raise rates to save the Yen:** They risk crashing the stock market, hurting domestic borrowers, and making…
Bank balance sheet data show that yen lending to offshore financial centers and non-bank borrowers remains elevated, suggesting a large stock of yen-funded positions, see the first two charts.
By contrast, speculative futures positioning has swung sharply, highlighting that carry trades can unwind quickly even as the broader yen-funded footprint remains in place, see the third chart.
Signifying loss of market confidence? #Yen #Japan
BoJ’s Policy Dilemma | The Bank of Japan is caught in a "pincer movement":
- If they keep rates low: The Yen will continue to crash against the US Dollar (currently near 160), destroying the purchasing power of Japanese households. - If they raise rates to save the Yen: They risk crashing the stock market, hurting domestic borrowers, and making…