Looking at Japans foreign currency reserves shows over $1T. This number tells me that the JPY is one of the most undervalued currency. What does this number mean to you?
Joined Jan 2008
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Status: Lunatic Supreme
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1T of what currency, yen? If that's the case I'd take an opposite standpoint.
Those kind of reserves should be put into action so the economy can grow, if they're that focused on controlling inflation w/o properly stimulating their economy their currency may appear strong in the short term... but will weaken against nations w/ a growing GDP over time. Granted they've slashed their interest rates, but it's hard to see that as anything other than a gimmick under those conditions.
It's basically a tight monetary policy with a weak fiscal policy. IMO that isn't good for their currency, it's just "not quite as bad" as it could be. I'd much prefer a weak monetary policy with a strong fiscal policy, or even better... strong both. But oh well, works well for trading against the JPY. JPY weakness works great w/ USD strength.
