Who are Japanese housewives
Japanese housewives are a term used in the foreign exchange world for the many Japanese matriarchs who have used currency trading during the first decade of the new millennium. With Japanese interest rates close to 0% for most of the decade, their motivation for currency trading was to increase the returns on their portfolios. These housewives are also called “Mrs. Watanabes”.
Breaking Japanese housewives
Japanese housewives had a noticeable impact on the currency markets. In 2007, officials from the Bank of Japan said that housewives’ trading activity helped stabilize the foreign exchange markets because of their tendency to buy in the troughs and sell in rallies. A significant part of these transactions were carried out via online margin accounts, which offered leverage of 20 to 100 times. Carrying, which involves borrowing in low-interest currencies and investing in higher-yielding assets, was also a preferred strategy for Japanese housewives.
The term “Japanese housewives” has also been used to describe day traders.
At the height of their popularity, Japanese housewives generally took care of the babywearing trades. A carry trade is one in which an investor borrows money at a low interest rate and then invests it in an asset that can provide a higher return than the interest on the borrowed funds. In currency trading, Japanese housewives bought Japanese yen at low rates and traded it for a profit against a high-growth currency such as the Australian dollar.
History of Japanese housewives
As early as the Edo period, Japanese housewives were responsible for managing the household, which included making important financial decisions. They acted as custodians of their families’ huge savings accounts, and after World War II these accounts began to increase. In the 2000s, they were collectively worth almost $ 16.8 trillion. Part of this money was stored in cash at home, and part was stored in banks. Unfortunately, at the time, Japanese national banks offered no interest, which pushed housewives to invest.
In the early 2000s, so-called Japanese housewives began to seek higher incomes than those they received from local banks. They quickly moved from a savings culture to an investment culture and, in most cases, they chose to invest in foreign markets, trying investments such as secured debt. The outpouring of yen from Japan brought the currency down to its lowest level in 20 years in 2007, even after adjustments for inflation.
A new currency market for Japanese housewives
Japan passed a law in April 2020 making Bitcoin a legal form of currency. This means that cryptocurrency can be used as a legitimate form of legal tender for payments or the holding of assets.
According to a Deutsche Bank study published in December 2020, Japanese housewives (or retail investors) could fuel the market for cryptocurrencies like bitcoin. These digital or virtual currencies are difficult to counterfeit and are considered more organic. According to the report, about half of global trade, about 40%, was made in Japanese yen in October 2020.