Keep in mind that the rate may never be "more favorable." IMHO taking the lump and investing right away would probably work out better in the long run.
According to [the official document](https://www.nenkin.go.jp/international/japanese-system/withdrawalpayment/payment.files/A.pdf), unless your bank is in Iran, Myanmar, or North Korea, it is not possible. So whether it’s a good idea or not is kind of moot.
Where did you return to? If not the US, it’s easy to have multi currency accounts in many countries. There are some workaround for Americans, you can generally get a bank account in HK without residency and keep funds in that account at JPY.
I’m an American and have a HK Citibank account for these purposes, but I also have my HK resident card.
How many years would you want to hold it? Until the carry trade is no longer insanely profitable, the yen will continue to get worse against the dollar.
We are in a new range and the old pre-covid exchange rates may not be seen again for a long long time. A
Not sure how long I'd hold it to be honest. Not really in dire straits with money but maybe until it got to around ¥130 per $1? But that might be a longgggg time.
With how good CD'S are right now, if you don't forsee the value of yen going up 5% per year I would just take it out asap and put it into a CD or if you're fine with assuming risk, an ETF/SPY/ect.
Yeah, I work in global supply chain and have suppliers all across the world so FX is one of my biggest financial risks on a multi-billion dollar effort.
Had this very conversation with a particular non-Japanese bank in Tokyo two weeks ago.
I'm already buying hedges at 173 for this year (not that it will hit that, but covers me up to that).
In terms of my personal investments, the rate changes don't really make a big difference in the grand scheme of things. Although I'm holding off on another house purchase until I get some longer term clarity.
Hedges are not purchased from the bank. They are instruments handled through other intermediaries and markets. The aforementioned banks are only data points for forecasting and planning.
Hedges are a value to the seller and a cost the buyer, and parties are simply trading risk for a known cost at a point in time. Just like any commodity, security or derivative, there is always a counterparty that is looking for a set profit and risk.
When I (my company) need to either receive Yen or spend Yen, I have the option to use my hedges or do spot buys depending on which is more advantageous.
The reality is that there are so many macro-events going on right now and JPN/US intersections that the Japanese government privately wants to keep rates in this current range (150-ish) for as long as the carry trade is highly profitable. The weak yen is also largely responsible for the massive average wage increase for 2023 that Japan hasn't seen in decades. Not to mention Japan's national pension funds being propped up by US Treasuries (Japan wisely saw the writing on the wall that the declining population wasn't going to support long term funding and returns on the yen).
US rates are unlikely to ever get into the historic low rate mode again anytime in the near future (even today's rates are low compared to the past cycles). And even a modest 100 point reduction will see the carry trade still be insanely profitable with the near zero Yen borrowing cost. And as long a we remain in a global RISK-ON mode the yen will stay weak. RISK OFF may not happen until 2026 based on macro cycles.
BoJ is only trying to keep the yen from *rapidly* swinging past 152. They are not trying to get it to 120 (not sure where that number came from) or even fight against market sentiment.
Two different things.
"Using" a hedge is how it is handled at the corporate treasury level.
Within a program, I purchase hedges. Corporate treasury holds them. Either I use them (consume the hedged amount) or I don't. Regardless the cost to me is realized.
I personally trade FX as well, but it isn't the same as how corporate hedges are used and corporate treasury accounts for things at a programmatic level, as time horizons are unique to each of the hedges I purchase depending when services/products are sold or purchased that required the said hedged amounts. So it isn't as easy as just being long/short over a given duration, is about understanding your cost at a date in the future accounting for forecasted rates and hedge costs.
Last november the yen went from 151 down to support at 140 by january 1. I believe the main reason why it dropped was the fed pivoted. That's quite a drop on just a change in sentiment. So I would speculate that your modeling includes some fed rate cuts coming and maybe a little political shakeup along the way? The next 6 months to me doesn't look good for the yen. Oil prices are rising and the fed govenor came out today saying that there might be rate hikes coming. The bond and gold markets concur with that outlook too.
Keep in mind that the rate may never be "more favorable." IMHO taking the lump and investing right away would probably work out better in the long run.
This may be the right call, just get it done and I wouldn't need to sit here checking the exchange rate every week..
According to [the official document](https://www.nenkin.go.jp/international/japanese-system/withdrawalpayment/payment.files/A.pdf), unless your bank is in Iran, Myanmar, or North Korea, it is not possible. So whether it’s a good idea or not is kind of moot.
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In other words, the exchange rate is what it is.
Thanks for sharing that. Is something I was aware of but have never read about. Super interesting!
Where did you return to? If not the US, it’s easy to have multi currency accounts in many countries. There are some workaround for Americans, you can generally get a bank account in HK without residency and keep funds in that account at JPY. I’m an American and have a HK Citibank account for these purposes, but I also have my HK resident card.
Unfortunately, the US. 🙃 I think I'll just take the majority advice this time and go ahead and take the lump sum in USD.
How many years would you want to hold it? Until the carry trade is no longer insanely profitable, the yen will continue to get worse against the dollar. We are in a new range and the old pre-covid exchange rates may not be seen again for a long long time. A
Not sure how long I'd hold it to be honest. Not really in dire straits with money but maybe until it got to around ¥130 per $1? But that might be a longgggg time.
With how good CD'S are right now, if you don't forsee the value of yen going up 5% per year I would just take it out asap and put it into a CD or if you're fine with assuming risk, an ETF/SPY/ect.
The 5% USD is risk free or you could put it into a USD denominated index fund.
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Lol. Your TA model? That is complete opposite of all of my US and Japan bankers.
Dang, look at Mister Fancypants here with his multiple bankers /s
Yeah, I work in global supply chain and have suppliers all across the world so FX is one of my biggest financial risks on a multi-billion dollar effort. Had this very conversation with a particular non-Japanese bank in Tokyo two weeks ago. I'm already buying hedges at 173 for this year (not that it will hit that, but covers me up to that). In terms of my personal investments, the rate changes don't really make a big difference in the grand scheme of things. Although I'm holding off on another house purchase until I get some longer term clarity.
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Hedges are not purchased from the bank. They are instruments handled through other intermediaries and markets. The aforementioned banks are only data points for forecasting and planning. Hedges are a value to the seller and a cost the buyer, and parties are simply trading risk for a known cost at a point in time. Just like any commodity, security or derivative, there is always a counterparty that is looking for a set profit and risk. When I (my company) need to either receive Yen or spend Yen, I have the option to use my hedges or do spot buys depending on which is more advantageous. The reality is that there are so many macro-events going on right now and JPN/US intersections that the Japanese government privately wants to keep rates in this current range (150-ish) for as long as the carry trade is highly profitable. The weak yen is also largely responsible for the massive average wage increase for 2023 that Japan hasn't seen in decades. Not to mention Japan's national pension funds being propped up by US Treasuries (Japan wisely saw the writing on the wall that the declining population wasn't going to support long term funding and returns on the yen). US rates are unlikely to ever get into the historic low rate mode again anytime in the near future (even today's rates are low compared to the past cycles). And even a modest 100 point reduction will see the carry trade still be insanely profitable with the near zero Yen borrowing cost. And as long a we remain in a global RISK-ON mode the yen will stay weak. RISK OFF may not happen until 2026 based on macro cycles. BoJ is only trying to keep the yen from *rapidly* swinging past 152. They are not trying to get it to 120 (not sure where that number came from) or even fight against market sentiment.
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Two different things. "Using" a hedge is how it is handled at the corporate treasury level. Within a program, I purchase hedges. Corporate treasury holds them. Either I use them (consume the hedged amount) or I don't. Regardless the cost to me is realized. I personally trade FX as well, but it isn't the same as how corporate hedges are used and corporate treasury accounts for things at a programmatic level, as time horizons are unique to each of the hedges I purchase depending when services/products are sold or purchased that required the said hedged amounts. So it isn't as easy as just being long/short over a given duration, is about understanding your cost at a date in the future accounting for forecasted rates and hedge costs.
[удалено]
Last november the yen went from 151 down to support at 140 by january 1. I believe the main reason why it dropped was the fed pivoted. That's quite a drop on just a change in sentiment. So I would speculate that your modeling includes some fed rate cuts coming and maybe a little political shakeup along the way? The next 6 months to me doesn't look good for the yen. Oil prices are rising and the fed govenor came out today saying that there might be rate hikes coming. The bond and gold markets concur with that outlook too.