Inside the Currency Market: Mechanics, Valuation, and Strategies

Repatriation and the Yen

For repatriation purposes, let's look at the U.S. dollar/Japanese yen and Japanese yen/U.S. dollar relationships. Notice the historic TIBOR chart and notice the Japanese central bank tracks U.S. Treasury bills and their own T-Bill rates and again further notice Treasury-bill rates are always above TIBOR. According to the August 2009 Treasury International Capital report that tracks foreign investment in the United States, the Japanese are and have been number two in purchases of U.S. Treasury securities for a number of years (TIC Data 2011). As the Japanese earn profits in Japanese yen/U.S. dollars, they purchase Treasuries with profits and wait for favorable exchange rates in U.S. dollar/Japanese yen and transfer the ...