• Clifford Bennett, Chief Economist at ACY


• 20.04.2022 10:00 am
#stocks , Clifford Bennett has over 36 years of market trading experience and was named the 'World's most accurate currency forecaster' by Bloomberg New York. He has advised some of the world's largest organisations, billionaire investors, and political leaders and spoken at the prestigious APEC summit on reserve currency issues. Clifford is the Chief Economist at ACY Securities.

Japan reported a trade deficit of 412 billion Yen in March. As part of an on-going trade struggle.

Any wonder the currency has been under tremendous and continuous pressure as global food and energy prices reach toward the stratosphere. There is not much Japanese authorities can do.

GDP registered 1.1% in the fourth quarter, but has been flat for the past decade. Retail Sales are negative and consumer confidence is plummeting. The economy is bouncing back in some sectors, but has not gained broad based traction. With the latest global supply-chain and inflation shocks only making matters worse.

While the government and Bank of Japan can do little more to solve the nations woes, surprisingly, all of a sudden, they may not have to.

The collapse of the Yen may prove to be the best thing that has happened for Japan this century.

It can be the catalyst to turn the whole economy around. To get everything moving forward rapidly in fact. With the lower currency will come further inflationary pressures, inflation has already begun to rise, but remains modest at 0.9%. There is room to the upside. So the usual negative of currency collapse, inflation, is in this case actually a positive. The falling Yen will also go a long way toward returning the nation to a trade surplus. Though supply-chain disruption will continue to hamper things.

What all the governments advisors and all the nations economists could not do, the lowly Yen may well achieve.

How far can it fall?

The truth here is perhaps not that much lower. The main driver of the prospect of a low being put in place soon is the huge speculative short positions that are now well established. It is very adept at talking its currency up while allowing it to fall further. Any news item or reason at all to buy Yen, would trigger a massive short covering rally.

This is how this collapse of the Yen will end. The timing or level is more problematic. Japan is not new to the game of competitive currency depreciation.

A long term chart of USDYEN quickly reveals that a move as high as 135.00 is certainly possible. Over coming years, perhaps 150. As I said though, any sharp immediate reversal at any time, could now trigger a short positions profit-taking rally. Perhaps back to 122.50.

From there, the Yen would remain weak however, and this is why we should view the collapse of the Yen, as laying a path at last for a sustained national economic recovery.

It has been a long time coming.

Clifford Bennett
ACY Securities Chief Economist.

The view expressed within this document are solely that of Clifford Bennett’s and do not represent the views of ACY Securities.

All commentary is on the record and may be quoted without further permission required from ACY Securities or Clifford Bennett.

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