I think to be honest with you,
I mean the joint communication from US,
South Korea and Japan a couple of weeks ago,
I thought that was quite a you know,
powerful signal, but I think the markets sort of ignored
that.
And again this shows you the wide yield differential is
really the root cause of yen weakness.
And until something is done to address that either from
the US side or the BOJ side,
I think you're going to the market will just think
yen remains a very attractive funding currency and you know
they continue to push the yen weaker.
That's exactly right. And then on that front.
You kind of alluded to the fact that they could,
you know, raise rates or whatever they could,
they could very much do that.
But what's stopping them then?
Is it because, you know,
for everything that they're saying or suggesting that,
you know, they think their economy is on the the
up and up,
Is it that the fiscal side that they're afraid of
in terms of the interest repayments considering their debt?
Or is it, you know,
the fact that perhaps their economy is precipitous in its
ability to to grow and see the inflation they're looking
for?
If you listen to the Bank of Japan communications,
they don't believe that the economy is strong enough for
inflation,
problematic enough for them to continue to,
you know, normalize policy further.
Look, I think the fiscal situation is not something of
a major concern at the moment.
Yes, we know that Japan has a huge amount of
government debt.
But don't forget Bank of Japan also has the ability
to cap how high 10 year JGB use can go,
for example. So they could always hike short term rates
and then kept the long term.
But again, it's going to be a little bit ineffective
in a grand scheme of things because you know,
even if they hiked by 10 basis points,
you still have over 500 basis points of yield differential,
you know, in favor of the US And really this,
this week, you know, we have a FOMC meeting coming
up.
You know all it takes is for the Fed to
turn less visual,
slightly hawkish.
Everything that the Japanese officials do will completely be overwhelmed.
There's a Fed care because the Fed could help,
you know, and we've seen it before in the past
like Asian financial crisis or whatever,
where the Fed, you know,
does things that aren't necessarily conducive to the domestic environment
in order to ameliorate a concern somewhere else.
Are we at that point yet where the Fed would
have to,
you know, alter policy to help the Korea,
to help, Japan to help?
I do not see them at that point at all
because if you notice from all the various FOMC statements
or even from,
you know, Fed officials.
I can. So I struggle to think 11 any moment
that any of them actually address the strong dollar.
So the dollar is actually not an issue at all
for the Fed.
So basically it's you know,
our currency, your problem, you know in in effect and
you know the fact is not going to you know
change your view on monetary policy just to help out.
You know, even allies in terms of,
you know, their currency weakness.