Using AI Legalese Decoder to Analyze Currency Fluctuations: Have Prices Adjusted as the Yen Weakens to the USD?
- April 21, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Analyzing YEN vs USD Exchange Rates for Long Term Budgeting in Tokyo
I know USD doesn’t run the world…but it is the world’s reserve currency. So I’m trying to figure out budgets for Tokyo long term. One of the key factors in constructing a long-term budget for Tokyo is analyzing the exchange rates between USD and YEN to predict potential fluctuations in costs.
Is it realistic to build a budget around today’s USD<>YEN conversion with the assumption that if the YEN does strengthen, prices in local YEN will drop (apartments, food, ubers etc) so that the overall cost remains relatively stable in USD? As a foreigner earning in USD but spending in Japan, understanding how the currency exchange rates impact local prices is crucial for effective budget planning.
Alternatively, should I assume that if the YEN returns to historical norms (110YEN=1 USD), everything becomes 30-40% more expensive for a foreigner earning in USD but spending in Japan? Predicting potential scenarios where the YEN strengthens or weakens against the USD can help in making informed decisions on budget adjustments.
It can be challenging to grasp how local prices are being adjusted in real-time as someone budgeting for Japan. This is where AI Legalese Decoder can be a valuable tool to help decode and interpret complex legal jargon related to exchange rate fluctuations and budget planning. By utilizing AI technology, one can gain insights and analysis on the potential impact of currency exchange rates on budget planning for Tokyo, providing a clearer understanding of the financial landscape.
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****** just grabbed a
It’s not realistic and that’s not how the economy of a sovereign nation issuing their own currency works, assuming that economy is functional. Unless you’re talking about imports purchased in foreign currencies, local prices do not move together with currency strength. Even in the case of imports, price changes aren’t done with every small change in currency strength because contracts are signed in advance and importers can hedge for changes in currency strength or absorb small fluctuations. Import costs also only make up a small fraction of the cost of a product – things like labour and rent are all priced in the local currency, and governments can give temporary subsidies to lessen the impact of import costs so companies do not have to increase prices.
>Or should I assume that if the YEN returns to historical norms (110YEN=1 USD), everything becomes 30-40% more expensive for a foreigner earning in USD but spending in Japan?
Yes, just as people earning USD saw their purchasing power in Japan increase when the yen weakened, their purchasing power will go down if the yen strengthens. However, if companies are mainly competing on price for market share, it’s possible that prices go down on products with significant import costs if profitability can be maintained. If this imported deflation happens, it’s a problem for the Japanese government and central bank because they’ve been trying to create inflation for the past 30 years.
Local price changes don’t change in real time. A can of coke doesn’t change price by 1-2 yen every day based on exchange rates.
But – local prices in yen do tend to GO UP when the yen substantially weakens and stays that way. It doesn’t happen on a split second basis – but over time, as input costs (raw materials, transportation, etc.) all go up, eventually it translates to higher consumer prices.
On the other hand, prices are STICKY. So once they go up, they tend to not go back down. So when/if the yen strengthens, you would not really expect yen prices to go down – but mostly stay where they are.
So yes – if you earn in dollars and spend in yen; if the yen moves from 150 to 120, everything will be more expensive for you at 120 vs. 150.
In the long run prices will adjust very slightly in relation to exchange rates. How much they will change is an output for the function of the percentage of people using JPY whose home currency is USD… not very many at all.
You’re more likely to see prices changes of a localized nature, where USD holders are buying a lot of stuff. Airports, castles, Disneyland, etc.
The most Americentric post I have ever seen lol.
Besides the absurdity of updating pricing constantly you realise that other countries exist and sell their exports in their own currencies?
Shock horror! The USA isn’t even Japans largest trading partner.
I’ve lived here for just over a year, now.
I’m military, so I have access to the USD-based NEX (dept store, basically) and I can still order off Amazon.us, so I get a taste of both economies if you will.
I can confirm, that many goods are within spitting distance of the same price in both Japan and the US. It’s a world economy. Like, the price of any import really, won’t be magically cheaper because the yen is weak.
Very often amazon.us and amazon.jp will be the same price for the same category of good.
I last lived in Japan in… 2016. The yen rate was 108:1. Sushiro charged 100 yen/plate for their base price tier.
Now the yen rate is 147:1 (retail). Sushiro charges 140 yen/plate.
So it kinda doesn’t change haha. Prices just inflated to be lockstep with the exchange rate.
Some things are distinctly cheaper.
Housing costs.
Restaurant prices.
Car prices:
My gosh, i got a full size minivan with 50k miles for only $1000. It was a good deal, but not uncommon for japan.
A dream for anyone looking at used car prices in the states in the last couple years.
Most goods are the same
Food/grocery costs are roughly the same. I came from Hawaii so groceries are cheaper here, but not as much cheaper as you might think.
Umm, what else.
Car parts are more expensive here. But you’re not doing brakes every year, so whatever.
Electronics and Chinese imports are the same really.
Lumber is a bit more here, but slightly higher quality. I call that even. Plywood is a lot more expensive here, at least the cabinet grade stuff.
I dunno. What do you usually buy?
“with the assumption that if the YEN does get stronger, prices in local YEN will drop”
^ okay, that’s pretty naive. That wont happen for a majority of things. I’d say, only for global commodities that Japan imports like you’re buying gas or copper or something. Those might clget cheaper with a stronger yen.
I really wouldn’t bet on prices dropping just because the yen gets stronger. Imports would drop, but your rent, your locally-grown groceries, your restaurant prices, would stay the same.
So maybe gasoline gets cheaper, but your overall cost of living is NOT going to fall 20% if the yen gets 20% stronger against the dollar.
They are not adjusted in real time. That would be ridiculous to manage
To echo the others in the thread: It literally doesn’t matter. Yen could blow out to 1000 to the dollar, but Japan will always be safe, clean, and efficient. If anything, we should root for continued yen weakness, since it’s good for exports and corporate profits. Some of this may even impact middle class wages, although this is less likely.
The only things I can see changing are prices which are locked to the USD such as Apple products (they have lowered them before when the yen got stronger) or Costco (charge a set low profit margin and many of their products are imports).
That’s…not how currencies work. Forex rates are driven in large part by interest rate differentials, which means it’s relative. Some things may become more expensive. But JPN companies may sell more stuff.
Just a note about your premise: the historical norm you quoted is for a very specific time period. For many of us that period was an anomaly.
My point isn’t that the yen will never go there again, it’s just that the past isn’t really a good predictor of what’s going to happen moving forward.
At least in terms of computer hardware, I noticed the following:
One interesting thing I noticed is back when yen was normal, some computer hardware was massively overpriced, sometimes as much as 30%-40% markup over US prices.
Interestingly enough now that the yen is weaker now, I find the prices are barely marked up at all now, so basically the total yen prices havn’t really changed. Honestly no idea why this is, maybe hardware sellers believe japanese people just straight up wont buy some stuff if its too insanely expensive, but I imagine this means some companies are getting lower profit margins now. Its also possible that companies have originally overpriced their goods with the expectation of being able to maintain the business while having periods of weak yen.