The Japanese yen has weathered a year of turmoil, and now it seems that the storm has cleared, and the U.S. dollar's harvest against Japan appears to have failed.

The Bank of Japan intervened in the market three times, spending 9.2 trillion yen, and finally pulled the yen back from the brink of life and death. This battle can be called a classic.

However, the latest data from Japan indicates that a wave of bankruptcies is coming, and the Japanese economy may still face a significant crisis. Who can be relied upon in the future?

RMB bonds seem to have become the best option.

01, Wave of Bankruptcies

It is well known that the United States has been continuously raising interest rates for a year, and many countries in the world are helpless against it. Continuous interest rate hikes have had a certain impact on the economies of many countries around the world.

Recently, the United States has also suffered a backlash, and the U.S. dollar has finally begun to depreciate, with signs of rising inflation within the country.

The United States is no longer able to harvest, and Japan has escaped a move, but at this time, Japan's economy has fallen into a state of stagnation.

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The relevant departments in Japan announced the business operation status of enterprises in January last week, with as many as 570 enterprises declaring bankruptcy in January of this year, a significant increase of 26% compared to the same period last year.

In the past 10 months, the number of bankrupt enterprises in Japan has continued to increase year-on-year.An increasing number of small and medium-sized enterprises are now going bankrupt. Many of these companies have debts of less than 50 million yen, which may not seem high. However, under the current sluggish economy and the sudden rise in inflation, they can no longer sustain themselves and have to file for bankruptcy.

It appears that even if the United States stops its intervention, Japan is still facing a greater dilemma.

02, 9 trillion yen for market rescue

However, it seems that the United States has not yet stopped and continues to raise interest rates.

In contrast, Japan remains in its current state, without taking any measures to raise interest rates in response. It is important to note that within just one year, the United States has raised interest rates by a total of 450 basis points, forcing many countries to continue raising interest rates to cope.

Where does the Bank of Japan get its courage? Is it because of the three market interventions it has made previously?

In 2022, the yen continued to depreciate, forcing the Bank of Japan to intervene in the market three times. On September 22 last year, it used 2.8 trillion yen, and then on October 21 and October 24, it used a total of 6.3 trillion yen.

With an investment of up to 9.2 trillion yen, the yen's exchange rate finally rose from 150 back to the current level of 130.

On the other hand, starting from November 2022, the US dollar began to depreciate. Although the United States has made policy responses to this, it has been to no avail.

This is undoubtedly a huge boon for the yen.03, Germany Overtakes Japan

However, this year, Japan's stock market has not been performing well, with the Nikkei 225 index only experiencing a 5% increase, which is significantly lower compared to other countries.

In the meantime, the German stock market has shown a noticeable upward trend compared to Japan's.

Why compare with Germany? This is because, in terms of GDP, after being surpassed by Japan, Germany has consistently ranked 4th, but now there is a potential for a reversal in ranking, allowing Germany to overtake Japan and return to 3rd place.

The development of the Japanese economy is very likely to lag behind Germany, as anticipated.

Various data analyses suggest that if a third place must be chosen between Japan and Germany, it is likely that Germany will secure that position this year.

This is because, starting from last year, it was evident that Japan's growth rate has significantly declined, indicating that the current economic development in Japan is facing obstacles, while Germany's economic development is receiving positive news.

Furthermore, Germany is part of Europe, and the future of the euro is boundless, even causing concern for the United States. The current trend of the euro is extremely optimistic, with the euro's rebound against the US dollar having a more promising outlook than the yen's.

This time, the European Central Bank raised interest rates by 50 basis points, narrowing the interest rate gap with the US dollar, while Japan remains indifferent, only to face the verdict of yen devaluation.

With one country rising and the other falling, when the GDP of both countries is converted into US dollars, it is naturally Germany that has the advantage.04, Renminbi Assets

However, if the Bank of Japan can continue to sell U.S. Treasuries, the possibility of being harvested by the United States may be further reduced.

But the issue is that Japan's attitude on this matter is inconsistent; it recently re-increased its holdings of U.S. Treasuries by $17.8 billion. The thoughts of Japan are indeed somewhat inscrutable.

Perhaps some of Japan's financial institutions have more foresight. In Japan, several insurance companies have begun to turn their attention to the renminbi.

As is well known, the renminbi is now a rising star in the global market with significant appreciation potential. Japanese insurance companies are in the process of investing a portion of their funds in renminbi bonds.

Safer, more substantial returns, and a stable appreciation in exchange rates, renminbi bonds are far superior to U.S. Treasuries from every perspective.