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Banknotes of Japanese yen are seen in this illustration picture taken June 15, 2022.
What’s happening to the yen, in plain English
Japan’s yen was trading at just a hair under 152 to the US dollar Wednesday, the weakest rate in 34 years, triggering speculation about a government intervention. But what the heck does that mean?
The background. Japan’s economy has had a weird problem for a long time: deflation. While most central banks worldwide have set high interest rates to combat inflation, Japan only last week ended its controversial negative interest rate policy.
The problem. Your economics textbook says the yen should have risen a bit. Higher interest rates make money more scarce — supply and demand gets to work — and voila.
Not quite.
Wary of spooking consumers, the Bank of Japan emphasized its commitment to keeping borrowing costs low. The US Federal Reserve, meanwhile, has been signaling it will keep interest rates high (and thus, dollars scarce relative to yen) for a while longer. Essentially, investors looking ahead dumped their yen and bought greenbacks.
The politics. A weak yen worsens Prime Minister Fumio Kishida’s already shaky position by making Japan’s imports — particularly energy — more costly. Tokyo may now have to sell dollars and buy yen to prop up its currency, but the optics are poor.
“It's not a great look for the Bank of Japan to take historic steps that should have strengthened the yen and then for the opposite to happen, causing the Ministry of Finance to jawbone the currency to prop it up,” says Eurasia Group analyst David Boling.GZERO Wrapped 2023
‘Tis the Spotify Wrapped season! (Or Apple Music replay season, for those of us out of step with the cultural zeitgeist). In the spirit of everyone sharing their most-played tracks of the year, the GZERO team decided to look back at some of our top-viewed articles of 2023. You’ll never guess who wrote our top pick …
Plus, check out GZERO’s totally real and definitely not photoshopped 2023 Spotify Wrapped playlists from some of your favorite politicians.
#5 What should Israel do next?, by Ian Bremmer, October 2023
Hamas’ surprise Oct. 7 attack – and Israel’s subsequent offensive in Gaza – was a giant inflection point for global politics this year, so there’s no surprise that our audience looked to Ian Bremmer for emotion-free analysis amid a trove of disinformation about the war. TL;DR: Ian says Israel has the right to defend itself from attacks on its civilians, but perpetuating a humanitarian catastrophe for the world to see will reduce its moral legitimacy and damage its international standing.
#4 Wagner and Russia’s next moves, by Tasha Kheiriddin, August 2023
This summer (feels like a lifetime ago), Vladimir Putin faced his biggest challenge to date and survived an almost coup. Increasing tensions between the Russian Ministry of Defense and the paramilitary Wagner Group came to a head on June 23, when Wagner chief Yevgeny Prigozhin and his troops marched toward Moscow. The rebels ultimately turned around before reaching the Kremlin, but Putin couldn’t let this level of public dissent go unpunished. Prigozhin died in a mysterious plane crash two months later, leaving many to question the future of the Wagner Group in Russia and around the world.
#3 Canada caught up in US-China maritime tensions, by Carlos Santamaria, June 2023
With so much going on in the headlines, disputed waters in the South China Sea might not be at the top of many people’s reading lists, but it was for our readers. In June, China sailed a warship very close to a US destroyer and Canadian frigate (which was legally in the area, according to the United Nations) in the Taiwan Strait. Although a somewhat benign incident, it’s important to remember: More intimidation leads to more risk of miscalculation … that could trigger armed conflict.
#2 Cuba tells Russia to back off, by Willis Sparks, September 2023
A story that went a little under the radar this year (but shouldn’t have): Cuba uncovered a human trafficking ring that sought to coerce Cubans to join the war effort in Ukraine. It wasn’t too surprising that Russia was looking for more troops: Putin enlisted citizens from neighboring countries and even recruited prisoners to fight in the war in exchange for their freedom. What was surprising: Cuba’s willingness to publicly release a statement speaking out against its longtime ally, Russia.