Some time ago, the Japanese yen surged continuously, but now that the US has cut interest rates, the yen has plummeted instead. This is too bizarre. Why is that?

These past two days, Japan is holding the Liberal Democratic Party's presidential election, which is essentially a change of prime minister. The US election is even more intense. Do they still have the energy to manipulate the yen at this time? That's right, the Americans want to grind the yen into the ground at this very moment. Why?

We say that the Americans want to grind the yen into the ground at this very moment. Why?

It's simple. This year, the Japanese have been too active. Although they still speak humbly, their repeated actions have, in fact, formed a stab in the back to the United States.

These days, Japan is electing a new prime minister. At this moment, the Americans are dealing them a harsh blow. This is a severe warning to make the Japanese understand clearly who the real big daddy is.

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So, how did the US beat Japan this time?

Let's briefly review the process of the yen being repeatedly battered this year and Japan's unyielding struggle.

At the end of March this year, the Bank of Japan raised interest rates for the first time, but under pressure from the United States, the Japanese side repeatedly stated that they would continue quantitative easing and would not raise interest rates again this year.

In late April, the yen was massively shorted by international short sellers, and the exchange rate once plummeted from 140 at the beginning of the year to 160.

Subsequently, the Bank of Japan intervened in the market several times, and the yen's exchange rate quickly rebounded to around 152. Then, the tragedy came.U.S. Treasury Secretary Yellen has repeatedly warned Japan against intervening in currency exchange rates and has placed Japan on the currency manipulation monitoring list.

Encouraged by this, international short sellers launched another major offensive. On July 5th, the yen exchange rate fell to its lowest point in 40 years at 162.

Ignoring U.S. warnings, the Bank of Japan raised interest rates again at the end of July and sold over $70 billion in U.S. Treasury bonds for four consecutive months, intervening multiple times to save the yen exchange rate.

Caught between the dual pressures of interest rate hikes and market interventions, international short sellers fled in disarray, and the yen's appreciation became unstoppable, surging all the way to around 142, successfully reclaiming all the losses of the past two years.

On September 19th, the Federal Reserve announced a 50 basis point cut in the U.S. dollar interest rate. On September 20th, the Bank of Japan announced that the yen interest rate would remain unchanged for the time being, once again stabbing the U.S. in the back.

Unexpectedly, this time the Japanese Ministry of Finance and the central bank showed a strong stance, repeatedly stating that they would raise interest rates again if inflation and economic data met expectations.

However, under the increasing pressure from the U.S., it was no surprise that the Japanese quickly softened.

On September 24th, Bank of Japan Governor Haruhiko Kuroda publicly stated that when formulating monetary policy, the Bank of Japan needs to carefully study the trends in the Japanese domestic market and the global economic situation, and that we have enough time to do so.

This statement was interpreted by outsiders as a cautious remark, indicating that the Japanese still succumbed to the U.S., and there would be no further interest rate hikes in the short term.

On September 26th, in the Tokyo foreign exchange market, the yen to U.S. dollar exchange rate once fell to its lowest level since early September, hovering around 145 yen to 1 U.S. dollar, with the lowest point this morning reaching 145.57.Many people may not quite understand what the yen's interest rate hike at this time means for the United States and the US dollar.

This issue is a bit complex, but to put it simply, the Federal Reserve's interest rate cut has narrowed the interest rate differential between the US dollar and other major currencies, while the depreciation of the US dollar has led to a flight of dollars from the US stock market, bond market, foreign exchange market, and banks.

Therefore, the most important task for the Federal Reserve is to prevent the US dollar from depreciating and fleeing too quickly by controlling the pace of rate cuts and managing expectations, in order to avoid the US dollar being withdrawn too quickly, causing the collapse of the US stock, bond, and foreign exchange markets.

Especially the US stock market and US bonds, the current bubble is too high, and the risk of collapse is very great, in addition, small and medium-sized banks in the United States are also very unsafe.

However, the euro, yuan, and even the pound will not easily cooperate with the US dollar in interest rate cuts, so this task is also very difficult even for the powerful Federal Reserve.

Only the yen is strictly controlled by the Americans, although there have been a few accidents this year, but as long as the key moment of interest rate cuts, the yen cooperates well.

Therefore, the Federal Reserve officials said a while ago that when the US dollar begins to cut interest rates, it is necessary to ensure that the yen cannot raise interest rates but should cut interest rates, in order to maintain the interest rate differential with the US dollar, and at the cost of yen depreciation, to support the US dollar index from falling too quickly.

In the past few months, the United States has unexpectedly allowed the yen to raise interest rates, allowed the yen to appreciate, and even agreed to Japan selling US bonds for several consecutive months, which is likely to want the yen to appreciate temporarily, so that after the US dollar cuts interest rates, it reserves space for the yen to depreciate or even cut interest rates.

The yen market is very large, if the US dollar cuts interest rates, and the yen also cuts interest rates and depreciates, it can provide huge support for stabilizing the US dollar.

Therefore, as soon as the US dollar cut interest rates, the yen depreciated as expected, and the United States once again brutally beat Japan, forcing them to cooperate with the US dollar's interest rate cuts.The US Dollar Index has also performed miraculously, managing to stay above 100.

How did the United States severely strike Japan? This question is not as important; the outcome shows that the blow was not light.

In fact, the Americans have many methods, such as interfering in Japanese elections, supporting whoever is obedient. Americans often do this and are very experienced, making it extremely effective.

What will happen to the yen's trend in the future? The Fukuoka Bank of Japan believes that by the end of this year, the yen will continue to weaken, and it is expected that the yen-to-US dollar exchange rate will fall to 155 yen per US dollar.

He spoke a great truth: when the US dollar lowers interest rates, the yen must depreciate, and may even lower interest rates.

The Japanese dream of raising interest rates, and now it depends on how strong their will to survive is.