Odd Lots Lots More With Brad Setser on the Yen, a New China Shock and Excavators
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May 10, 2024 
Brad Setser, a senior fellow at the Council on Foreign Relations, dives into the intriguing dynamics of currency markets and global trade. He discusses the falling Japanese yen and the factors behind its weakness, including interest rates and economic policies. Setser also explores how a weakening yuan is boosting China's exports, hinting at a potential new "China Shock." Additionally, he examines the significance of China's excavator exports as a reflection of its economic health and the complexities of U.S.-China financial interdependence.
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Yen Weakness
- Japan's weak yen is not necessarily a sign of economic problems.
- It's a consequence of the Bank of Japan's monetary policy differing from the Fed and ECB.
Yen Intervention
- Japan's goal with yen intervention isn't to strengthen the yen, but to limit its weakness.
- They aim to keep it within a specific range rather than reverse the trend.
Japan's Inflation
- While Japan aims for higher inflation, their low inflation hasn't been entirely negative.
- However, zero inflation and interest rates limit monetary policy flexibility during downturns.