Richard Michelfelder, Rutgers Professor of Professional Practice, Shares Expert Insight with ABC News on U.S. Support for Japanese Yen
When global financial markets shift, the effects can reach far beyond currency traders and Wall Street. Rutgers School of Business–Camden professor of professional practice Dr. Richard Michelfelder recently shared his expertise with ABC News to explain why the United States is supporting the Japanese yen and what the move could mean for the U.S. economy.
In the ABC News article, “Why is the US Treasury propping up Japanese yen? Experts explain,” Dr. Michelfelder discusses the broader economic implications of Japan’s weakened currency, including its potential impact on U.S. trade, Treasury bonds, interest rates, and borrowing costs.
Japan is one of the world’s largest and wealthiest economies, but the yen’s decline has made American goods significantly more expensive for Japanese consumers. As Dr. Michelfelder explained to ABC News, “The price of American goods to the Japanese in yen is double what it was 20 years ago.” A weaker yen can reduce Japanese demand for U.S. products, contributing to the trade imbalance between the two countries.
Dr. Michelfelder also highlighted an important connection between Japan’s currency intervention and U.S. interest rates. Japan holds a substantial amount of U.S. Treasury securities. Without U.S. support, Japan could potentially have needed to sell some of those holdings to purchase yen. A large-scale selloff of Treasury bonds could push bond yields higher, potentially increasing borrowing costs throughout the U.S. economy.
“This helps keep U.S. rates down,” Dr. Michelfelder told ABC News. “If they have to sell some to buy yen, that will come back to bite us.”
His comments illustrate how interconnected the global economy has become and why understanding international finance is essential for today’s business leaders. From currency markets and trade relationships to interest rates and government debt, economic developments in one country can have significant consequences around the world.
Read the full ABC News article, “Why is the US Treasury propping up Japanese yen? Experts explain,” to learn more about the economic factors behind the U.S. intervention and what it could mean for consumers, businesses, and financial markets.