The Yen.

So… I knew this would happen. I totally knew this would happen. But I kept thinking, you know, “it’ll happen, I’ll twitch, I’ll panic, it’ll be lots of running in circles, then it’ll just return to normal and I’ll figure out a way to keep things on level ground.” Hah.. yeah.

What’s going on? The yen is speeding ahead of the other currencies in the world at a pace I didn’t know was possible. What does this mean? The USD, the euro, and, more importantly (for me), the swedish crown, are all steadily losing their value against the yen.

(Yen/SEK is not “yen per second”, but “yen per swedish crown)

The above is a *very inofficial* diagram based on my own plotting of the yen versus the swedish crown as I’ve lived here — I’ve kept good track of it since all my cash is in Sweden, which means that whenever I withdraw money from an ATM, the amount of money I actually “lose” from my account varies depending on the above chart. As you see, there’s a nice downward curve there at the end, starting at the end of this summer, and, well, so far not ending at all.

I thought this was something “local” at first — as in, local to Sweden, and/or to Japan, but it seems everyone around me is talking about this now, and even the folks back home are saying that the market is looking hairy. I’m sure you guys have felt it too one way or another (stockholders, in particular).

It’s no trifling matter, though. I now pay about 44% more for everything that I buy here, compared to this summer. Imagine if your rent, your gas bill (if you have one), your electricity, your groceries, your bus tickets, the alcohol at your bars, cigarettes, gasoline for your car… imagine if all of that, in one single sweep, got 44% more expensive.

What usually cost $1 suddenly costs $1.44. What usually costs $20 now costs $29. What usually costs $50 suddenly costs $72. And the big bad one — rent. My rent here went from something like $210/month to $320/month. A $110 increase. In about 2-3 months’ time. It hurts, lemme tell you.

There are varying theories on why this is happening, some more disheartening than others. We swedes have speculated that this is a temporary deal, because Japan is so extremely dependent on import/export. The yen simply cannot stay stronger than the rest of the world, because the rest of the world will refuse to buy from Japan (the Japanese will want payment in yen, and the rest of the world will not wanna buy at 44% the higher price), especially with companies like Sony and Nintendo who don’t want to fall behind Microsoft in the console competition. If Sony and Nintendo are forced to cut prices by 44% just to keep up, it won’t look pretty on their financial reports.

Then there is the theory which stretches back 7 years or so. One of the women I teach English to told me today that when her daughter went to Sweden (yep, her daughter has lived in Sweden) back in 2001, the swedish crown cost 12 yen. That’s close to where it’s at now, if you take a look at the chart above. According to her, things have simply fallen back from being out of proportion for the last 7 or so years. Since 2001, she claims, the yen has gradually dropped in value against the other currencies and kept dropping steadily until it was what you see if you look at the chart around summertime — 17.88 yen per swedish crown. If I had only known. Well, in hindsight, I’m not sure I’d have done any differently from what I did, but I think I might have at least saved up 1/3rd of my buffer in Japanese currency if I’d realized the yen was so outrageously weak compared to 7 years earlier. Live and learn.

Update: The real reason appears to be panicky international investors;

“The yen’s recent jump, so lethal for Japanese exporters like Sony, was set off by panicky international investors rushing to unwind yen “carry” trades, which had taken advantage of Japan’s low interest rates to borrow yen to invest elsewhere. Reversing those trades means buying back the yen, lifting its value.”
– http://biz.yahoo.com/ap/081029/as_japan_earns_sony.html

In any case, now I’m twitchily trying to not spend money on anything if I don’t have to, and I’m also trying to find a(nother) job while studying. It’s quite a pain for me, because I’m a spoiled Swede who’s never ever worked and studied at the same time in the past (student aid and such), but now is not the time to go all “but my studies must not suffer — I cannot allow myself to take time away from them” on myself (they call it “iiwake” over here) and just get to it because I’ll ruin myself otherwise.

Wish me luck. (The next post will probably be about how I lost that job teaching those kids that I wrote about earlier…)