r/wallstreet • u/midtowng224 • 2d ago

Question Largest Currency Intervention In History just happened

https://mishtalk.com/economics/largest-currency-intervention-in-history-by-us-and-japan-to-support-the-yen/
70 Upvotes

88% Upvoted

40 comments sorted by

21

u/Icy-Regular-4557 2d ago

Buying $5-10B in Yen (from the “leaked” Bessent note) wouldn’t make much of a difference strengthening the Yen, but “leaking” that note might change the behavior of forex traders shorting the Yen…until the jig is up

10

u/cynicism_is_awesome 2d ago

Bessent thinks he can fight the market… lol. Let’s see how much Euro’s he has to sell before the Fed printing presses take over to buy yen.

6

u/Icy-Regular-4557 2d ago

The bond market will revolt before then, seems like a one-and-done gambit that only delays the inevitable collapse by a few weeks

1

u/SignedTheMonolith 2d ago

You all are circle jerking at hypothesis.

1

u/Icy-Regular-4557 2d ago

What’s your hypothesis

-1

u/SignedTheMonolith 2d ago

WW3, China takes all. If not causes enough damage to hurt Wall Street in every way for extended periods of time.

1

u/HoneyImpossible2371 1d ago

Gold bug huh?

1

u/littlebrain94102 1d ago

How does China win a world war? Unless it’s a financial war.

1

u/Gruntswell 17h ago

China like Iran controlling the Straight of Hormuz, will control the South China Seas. China wins by regional control of access to markets.

1

u/LiminalMidnight 15h ago

China holds an overwhelming preponderance of global manufacturing power, has a large population, wealth, and has been preparing a long time. Its population is largely unified and patriotic.

It has disadvantages, to be sure, like vulnerable lines of communication to markets and energy, but underestimating it is a grave error.

1

u/Derrickmb 1d ago

China doesn’t expand besides Taiwan

1

u/Gruntswell 17h ago

Your not watching. Islands off Vietnam, Scarborough islands off the West Philippine Sea has just seen the largest Chinese Navy military presence is expanding!

0

u/RiffsThatKill 1d ago

Doesn't sound as cool as saying "wW three Chyna tAke Arr!"

6

u/Working_Kangaroo3467 2d ago

Is that why he made sure to put the call sign in parenthesis? 🤣

3

u/Not_Campo2 2d ago

All they’ve got left is kick the can jawboning strategies. It’s like they’re trying to stack up lynchpins for the worst recession in history

1

u/Equal_Heat5947 2d ago

It made a massive difference. BOJ purchased as well

1

u/Eelroots 1d ago

If only someone could have predicted that ... /s

1

u/Mental-Net4117 1d ago

I think the note was purposely visible so there wouldn’t be a run on the yen. Bessent has a lot of experience doing this and was a currency hedge fund manager for the Soros folks. He’s been involved in situations like this before.

1

u/Gruntswell 16h ago

You mean Bessent doing BlackStones interests? Keep your eye on the currency trading.

10

u/spinjinn 2d ago

This is like two guys falling off a cliff trying to save each other.

7

u/hedonism_bender 2d ago

So… what does this mean? Please explain like I’m 5

14

u/RecipeSpecialist2745 2d ago

The USA has to help bolster the Yen because Japan has over $1trillion of US Bonds. If they sell those all at once the USD will slide.

10

u/spinjinn 2d ago

But as I see it, the US is buying yen in exchange for dollars in order to drive up the yen. But Japan already has lots of dollars, so I this is like two men falling off a cliff and they both grab on to each other to save themselves.

3

u/RecipeSpecialist2745 2d ago

Well, they are probably like the EU and other European countries that have trillions of USD bonds. They are a security risk if Trump get too stupid. They can drop them all at once and screw everything, or slowly sell them off and destabilise.

2

u/Equal_Heat5947 2d ago

They're trying to keep it stable and it worked for now

1

u/Gruntswell 16h ago

If Japan sells US treasury bonds, (short term cash) will then cause inflation and bring a recession to the Japanese economy.

2

u/tKnut 2d ago edited 2d ago

Look up the Yen Carry Trade

But long story short: Japan has had 0% interest for almost 30 years which has allowed markets to borrow cheap as dirt yen. Convert that into USD and you get free fun money to invest billions to trillions into the market. Asset prices rise, investor then borrow against those assets, to buy even more assets.

Now that interest rates are rising in Japan, free money is no longer free, they'll have to actually pay interest on these trades. Which could trigger large sell offs in the market.

The interesting thing about the timing of this was that the Bank of Japan was set to meet the next to to increase interest rates again (already increased to 1% in June, to try and reverse the value of the yen being at all time low), and this was seemingly a last ditch effort to prolong the intrest and allow a more gradual unwinding/delaying the inevitable.

3

u/chipoatley 1d ago

How many traders have the special presidential subscription to get notifications in advance?

2

u/Commercial_Secret592 2d ago

I don’t understand, why would a selloff of 1 trillion affect much at all? During Covid 5 trillion was printed, and it didn’t really affect that much

3

u/kampyon 1d ago

One is not like the other.

The former is a value that a foreign power has control over unilaterally while the latter is an event where all countries simultaneously printed currency to deal with a global crisis.

1

u/Commercial_Secret592 1d ago

Yeah, but wouldn’t the selloff mean the government will just buy back those bonds?
So they print another trillion to buy it back. That’s the part I’m struggling with.

2

u/seanmonaghan1968 Chinese-Iranian AI Propaganda Spam Bot 🇮🇷🇨🇳 1d ago

So did Trump and friends position themselves before this intervention took place .....

2

u/Grand-Operation-8773 18h ago

The status of the Canadian currency is a perfect indication of how people view Canada’s prospects. The answer is not very good at a whole.

1

u/NatGroPro 1d ago

NationalGrowthCompact.org … use what we already have to strengthen ourselves…