The hottest Currency Markets Substack posts right now

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USDJPY: The Most Important Chart in the World

Kerman Kohli • 118 implied HN points • 08 Oct 24
💰 Finance Currency Markets Debt Management Global Trade Interest Rates
  1. The Japanese Yen's value impacts global trade. When the Yen is weak, Japanese exports become cheaper for other countries, but imports get more expensive.
  2. Japan's massive debt isn't a problem as long as their interest rates stay low. This keeps borrowing cheap, allowing them to manage their debts without immediate consequences.
  3. The USD/JPY exchange rate is crucial for understanding the global economy. Changes in this rate can affect investments and interest rates in other countries, making it a key chart to watch.

The Sword of Damocles

The Dollar Endgame • 319 implied HN points • 30 Aug 23
💰 Finance Global Markets Economic Theory Central Banks Currency Markets Monetary Policy
  1. The global financial system heavily depends on the US dollar, causing a constant demand for dollars worldwide.
  2. Triffin's Dilemma and the Dollar Milkshake Theory highlight the systemic risks and implications of the US dollar's dominance.
  3. The Fed plays a critical role in stabilizing the global financial system by supplying dollars; any missteps could lead to widespread financial instability.

Yen At ¥128.6

Japan Economy Watch • 279 implied HN points • 19 Apr 22
💰 Finance Currency Markets Interest Rates Economic Impact
  1. The yen has weakened to ¥128.6 from earlier lows, fluctuating as markets don't move in straight lines.
  2. MOF interventions in currency markets may not have a lasting effect if the yen's decline reflects fundamentals.
  3. The interest rate gap between the US and Japan is a major factor driving the yen's decline, with investors shifting money to the US due to higher rates.

January 2018 Data Update 4: The Currency Conundrum

Musings on Markets • 0 implied HN points • 24 Jan 18
💰 Finance Risk management Investment Analysis Currency Markets Economic Theory Sovereign debt
  1. Many people wrongly assume that government bonds always have no risk, especially when they are in local currency. But countries can default on these bonds, making their interest rates not risk-free.
  2. There is no single global risk-free rate; it varies with inflation across different countries. Mixing risk-free rates from different currencies can distort financial analyses.
  3. Choosing the currency for valuation doesn’t change a company's inherent value, since risks and cash flows should align with the currency used.
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