1.Exchange rate:JPY/TWD=0.2762 TWD/JPY=3.6475
1.2 Variations of exchange rate
Followings are the charts of exchange rate with different length of time.
The range within a year is in between 3.5568 to 3.8421, the interest rate today is 3.6475 which is just little higher than the lowest point 3.8421.Japanese Yen has been appreciating since January 2018. If you want to go to Kyoto to enjoy the beauty of cherry blossom, it’s better to exchange for Yen before January this year or would be more “expensive “.
2.interest rate & variations
The followings are the chart and the table of Japan yields. The interest rates are included in the calculation of yields. The formula is:
Yield curve indicates how much return you get from lending money. From the chart, we could see it as two parts separated by the 7.5y time break. Before 7.5y the 1 month curve gets lowest yields than the other two which indicates lending money lately profits more than 1 month ago. Vice versa if you are lending for more than 7.5years. Also, from the table we could see that within 5 years the yields are negative. As we know the higher the yields are the cheaper the bonds would be vice versa. But what if the yields are negative? Negative yields implies negative interest rate:
In order to have a negative annual percentage yield, r/n should be negative and because n as the number of times is positive therefore r interest rate should be negative.
So why would anyone buy bonds whose interest rate is negative?
Well, the lenders in financial markets are usually banks, and if the lenders lose money the borrowers earn the spread. Japanese government hopes to boost the economy by setting negative interest rate as an incentive for investors to borrow money. These monetary policies are called quantitative easing.
Theoretically, quantitative easing should help stimulate bank loans and customer consumption. Nonetheless, enterprises show little interest in borrowing money since there aren’t many investing opportunities. The result of monetary policy seems to do little on Japan’s economy, the structural changes perhaps will be more useful.
3. Inflation rate and variations
The formula of inflation rate:
The rate of inflation formula measures the percentage change in purchasing power of a particular currency. As the cost of prices increase, the purchasing power of the currency decreases.
The rate of inflation formula shown uses the Consumer Price Index which is released by the Bureau of Labor Statistics in the US. However, other similar indices may be used at times.
Japan’s inflation rate averaged 3.02 percent from 1958 until 2018, reaching an all time high of 24.9 percent in 1974 and record low of -2.5 percent in 2009. Recently the inflation rate has risen by 1.4% the highest since 2016 though the number is still lower than the goal of Bank of Japan’s 2%.
The price of power source surged contributed mostly to the raise of CPI because the raise of the oil price lead to the the raise of electricity and gasoline price. During the same time, the price battles between communication service dealers gave the opposite on the index.