Blog: The Yen and the Fractal Nature of Currencies
Currencies are different than stocks and bonds, though all are fractal.
The Japanese yen has been in the news lately. The Japanese central bank and the US treasury have been defending the yen because they believe the yen at 160 to the dollar is too weak. Why is that a problem? A strong dollar and weak yen make Japanese goods cheaper in the US and US goods more expensive. Since the administration wants the US to export more to Japan, a weaker dollar is desirable. Strangely in 1987 the yen fell to this level and it was considered too low and helped cause the Stock Market Crash of 1987. So what is it about currencies that make the same price level over 39 years ago bad while now it's good?
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