Currency Wars, Blah, Blah, Blah

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 |  Includes: JYN
by: The Macro Trader

Are you as sick of the term “Currency Wars” as we are? The book by Jim Rickards is timely and definitely worth reading but these days the term has gotten out of control. It’s as if the media just found out about competitive devaluation. If we look up “currency war” on Google Trends we get this chart showing that this is the second time the term has gotten out of hand.

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Currency Wars-google trends

Most of the fuss, we actually like the term hullabaloo, has been regarding Abe over in Japan and the yen’s free fall against pretty much everything. What is funny is that when you put this move into perspective the correct adjective goes from “war” to something closer to “heated discussion”. Here is the USD/JPY from 1972-now.

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USD-JPY 1972 to Now

Do you remember everyone getting mad at the 76% rise from almost 325 down to 75? The Japanese must have been playing out their evil plot to make their exports less and less competitive right? Maybe not. What about the past 15 years or so. Surely we would remember if the yen was getting too expensive and the hullabaloo surrounding the huge rise right? Well from 1998 to now the yen is still up 34% from its 1998 low of 145.

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USD-JPY 1998 to now

What about the past six-plus years? If anything had happened in that time period we would certainly have had “currency wars” fresh in our heads right? Once again the world, or at least the media, must have missed the meme as those evil folks at the BoJ kept taking the yen 37% higher from 120 down to almost 75 against the USD.

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USD-JPY 2007 to now

Of course this meme didn’t really pick up steam until the current move where the yen actually dropped 23% in five months. Apparently when the yen is getting stronger the speed or magnitude does not matter but when it is getting weaker they are evil currency manipulators. Is there a currency war going on? The answer is of course yes. Are the Japanese responsible for it? The answer is of course no, at least not any more that the rest of the central banks out there that do what their “economies need” even if the actions have direct implications in the currency markets.

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USD-JPY October 2012 to Jan 2013