Intervention in the Currency Markets Halts the Rapidly Rising Yen

The dollar soared 2.7% against the Japanese yen to 81.31 yen after the G-7 announced coordinated intervention in currency markets. The G-7 will buy dollars and sell yen in an effort to weaken the Yen and stimulate Japan's export economy.

My suggestion to short the Japanese Yen yesterday morning is already playing out. The YCS, an ultra-short ETF that bets against the Japanese Yen, is up almost 6% this morning.

Fundamental reasons that suggest a weaker yen is the future:

- Rebuilding efforts in Japan since the earthquake will require imports of materials. This will force the borrowing of money for reconstruction adding to national debt.
- Japanese debt is already enormous at 100% to GDP
- As Japanese production of goods takes a serious hit from factory shutdowns, Japanese exports will go down, meaning less export revenue.
- Japan continues to print money through quantitative easing.
- Similar situation occurred after the Kobe earthquake in 1995. The Yen initially rose, but eventually decreased and continued to do so for the next 3+ years.
-Technically, the Yen Chart shows a multi-decade double top and it just happens to coincide with two catastrophic earthquakes.
-The bank of Japan cannot lower interest rates to stimulate their economy, interest rates have already been at or near 0% since the mid 1990s
-Demographics in Japan show an aging population. This means less young people earning wages and paying taxes and more retirees collecting government benefits. A smaller number of workers is supporting a larger number of retirees.
-It is in the best interest of Japan to devalue the Yen in an effort increase exports. You can see they are finally beginning to succeed with the latest G-7 intervention