How the Japanese can get their exchange rate down

A lot has been made of so-called Abenomics after comments in Japan about forcing the central bank to set and defend a 2% inflation target. Getting a consolidated government balance sheet from a fiscal and monetary agent working hand-in-hand would be a true paradigm shift. Nonetheless, in truth, until we actually see action, this latest move by the Japanese is just another salvo in the ongoing currency wars.
The real goal of incoming Japanese Prime Minister Shinzo Abe is to depreciate the Japanese Yen in order to boost exports. And while the talk about creating a unified monetary and fiscal regime has certainly made the Yen weak, this effect is only temporary. What really drives exchange rates is real interest rates and that means we need to see Japanese interest rates minus inflation sink...


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