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  • Writer's pictureAdam German

Yen intervention likely only at the 160 to 165 level says Jesper Koll

Speaking with CNBC’s Squawk Box on April 12th, famed Japan analyst Jesper Koll discussed the potential for currency intervention by the Ministry of Finance due to rising volatility in dollar/yen.  


Jesper emphasized that without concrete policy changes, intervention is risky and suggests actual intervention may only occur if the exchange rate reaches around the 160 to165 level.  


Jesper also focuses on the impact of central bank interest rate differentials and questions if the Bank of Japan is lagging behind the curve in normalization efforts.  


Also discussed are concerns about inflation momentum and consumer spending. 


On the point of wage inflation, on April 14th, CLSA’s Nicholas Smith, another well-known Japan economic strategist, posted on LinkedIn that SME bankruptcies due specifically to labor shortages rose 114% year on year in FY2023.  


CLSA Nicholas Smith on FY2023 Japan SME Bankruptcies


Some estimates put the number of Japanese workers employed at SMEs at roughly 80% of the total workforce. 


To some, a rise in zombie SME bankruptcies can bring about the creative destruction needed to free up labor that was previously trapped in unproductive SME’s.  


That labor would then move over to more profitable companies that can afford to pay higher wages. 


Sustained higher wages means a more confident Japanese consumer, which leads to more household spending thus creating the “demand-pull” type of inflation desired by the Japanese government instead of the current “cost-push” inflation brought about by the weak yen. 


What does this have to do with residential real estate? If you are reading this then you have an interest in buying a Japanese property or already own one; either for investment purposes or for your own use. 


Wherever you fit, your counterparty will most likely be Japanese so how the middle class is doing will have an impact on how easy or difficult it will be to achieve your property goals.   


Further Reading: 


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