Sanctions convulsions against Russia: the euro and the yen char against the dollar

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Sanctions convulsions against Russia: the euro and the yen char against the dollar

Kanako Mita, Sawako Utsumi and Lee Jay Walker

Modern Tokyo Time

The Bank of Japan (BOJ) is in a permanent straightjacket linked to debt: while the European Central Bank (ECB) is feeling the convulsions of the sanctions against the Russian Federation. Consequently, the euro and the yen continue to decline against the dollar, with the BOJ having few options to assuage the concerns of major importers.

Ironically, the currency of the Russian Federation is doing well despite G7 and European Union (EU) sanctions. Thus, in a parallel universe, one would think that the EU and Japan are facing sanctions. It highlights the respective weaknesses of the G7 and EU countries in the economic arena, as they also harm ordinary citizens with high food and energy prices in their respective countries.

Furthermore, they harm countless businesses while political elites play their geopolitical games: and Africa and other parts of the world suffer disastrous consequences because EU and G7 countries cannot bridge energy and other vacuums in the international market.

reports Reuters, Eurozone bond yields fell sharply on Monday as long-term inflation expectations fell below 2% as recession fears deepened after warnings of a possible cut in Russian gas supplies .”

The ECB will buy more bonds from the usual European basket cases that catch the flu rather than a mild cold. For example, the ECB will buy bonds from debt-ridden nations, including Italy. Naturally, the more conservative European countries, including Austria, Germany and Holland (the Netherlands), believe that the ECB’s aid to indebted countries should be accompanied by essential conditions.

The EURO has reached parity with the dollar for the first time in two decades. This happened after further negative news from the EU regarding gas supplies from the Russian Federation. At the same time, the rising cost of living is hitting citizens across the EU extremely hard. Consequently, the political elites of the EU and G7 are imposing new economic hardship on ordinary citizens despite more than two years of convulsions over the Covid-19 crisis.

Regarding Japan, the Modern Tokyo Times recently stated: “Japan is plagued by the highest debt ratio in the world. This is about the endless mismanagement of the economy by the ruling LDP. Not content with this, the government is embroiled in the unhealthy purchase of Japanese government bonds (JGBs) via the Bank of Japan (BOJ) – while the BOJ and the Government Pension Investment Fund (GPIF) hold about an eighth of the market capitalization of the Tokyo Stock Exchange (the first section)”.

The BOJ owns about 50% of all JGB long-term debt. This equates to just under 529 trillion yen, or just under $4 trillion. Therefore, with the BOJ facing the straitjacket of interest rates – linked to the huge debt that Japan holds – expect the BOJ to buy more bonds as well as further pressure on the yen. regarding the strengthening of the dollar.

The Washington Post reports, “In the United States, the Fed has aggressively raised interest rates, pushed Treasury yields higher and made the greenback more attractive to investors than the euro. The U.S. central bank has raised rates three times in 2022 and signaled it plans four more hikes as part of its strategy to keep inflation in check.

reports Reuters, “The Japanese government is concerned about the recent sharp falls in the yen and will monitor the currency market with even greater urgency while working closely with the Bank of Japan,” Chief Cabinet Secretary Hirokazu Matsuno said Thursday. .

However, this essentially means more domestic debt in Japan by borrowing to prop up self-induced weaknesses in the domestic economy – once again, ordinary taxpayers bearing the brunt of Japan’s political family elites making the usual bad decisions on a “Washington’s Geopolitical Whim.”

The one thing Japan is good at is printing money like never before tomorrow – and buying bonds in good measure.

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