Job Discussion Forums

[Chris21]

MOD EDIT

Has anyone noticed lately that the yen has been on fire! Up-to-the-minute rates on Yahoo Finance show that it's dipped below 119 to the USD! From 123 to below 119 in a week... I love it!

[gonzarelli]

[Eva Pilot]

The Yen is a lot weaker against the Australian dollar than when I came.

I'm not going to be leaving with much money.

[Chris21]

Perhaps I'm too optimistic, but I think last week was a turning point. Because part of the yen's weakness is due to carry trades, it can turn quickly when people get spooked. Volatility can make investors pull out of carry trading, and put their money back into yen. So, if you don't own stocks, yesterday's Dow meltdown might be good news. The Aussie dollar is also one of the currencies that benefits most from carry trading the yen, so any strength in the yen is going to be closely correlated with a weakness in the Aussie dollar. I saw the Oz dollar has gone from 106 to 104 in about a week.

Anyway, I was thinking of biting the bullet and converting my savings when it was 123 to the USD, but I'm glad I held off. I'm going to wait for it to fall below 110.

[Hoser]

[flyingkiwi]

Chris 21, define carry trading please (novice in economics here).

[Chris21]

Carry trading is when people take a loan at a Japanese bank at 2% paying interest, and then buy up foreign bonds at 7% receiving interest. So they technically make a 5% profit just by moving their money outside the country. When Japanese interest rates rise or foreign rates fall, it becomes less appealing. It's also less appealing when there is instability in foreign markets.

Japan's interest rates are so low, and a country like NZ has really high interest rates, so a lot of novice and expert investors have been moving their money out of Japan into places like NZ (hence the strength of the NZ dollar). If people get frightened with what's happening in the global economy, they could pull their money out of NZ and bring it back to Japan (weakening the NZ dollar and strengthening the yen). There's a bit of a herd mentality to this from what I understand... when people notice the currencies shifting, they get nervous and join the herd (creating a cycle that results in quick changes when the currency finally turns).

[Apsara]

And we have just about reached 100 yen to the NZD- these are sad times...

[gonzarelli]

[Chris21]

Why the bitterness?

[gonzarelli]

[flyingkiwi]

[Apsara]

I got it from the actual rate I get from Lloyds when I send my money back to NZ, which was 99 point something on Monday. That's the rate which actually affects me, so that's the one I always think of. Seems I should have waited a couple of days though!

A friend was back in Auckland last week and for the first time ever was geting less than 100 NZD for 10,000 yen when she exchanged money- once the commission had been taken out it was barely $90, she says.

[cornishmuppet]

Just checked a moment ago and the pound is 242.4. It was 243.6 when I got up this morning and 250 on Monday when I first looked at sending some cash home. I'm glad I haven't done it yet, but I'm not sure how long it'll last. I'm happy and all, but the speed with which its dropping is rather alarming. I have no idea what goes on in finance but I'll be happy if if goes and sits at 200 to the pound again.

[Jon Taylor]

My advice would be to wait until the Yen drops back to somewhere around the 210~220 mark against the British pound.

It will do eventually....just may take 6 months~1 year to do that.

Current rate on Lloyds is 246.14