Forex markets are "shaken" after a decline the credit rating of Japan's S & P from AA to AA-that push the pair USD / JPY one big figure to 83.00 higher, with the result, the dollar rose against other major currencies. Last modified S & P rating was in April 2007 (enhancement). A decrease occurred because the S & P took the view that Japan has no coherent strategy to address the problem of debt.It is easy to say that Japan is not alone on this front. The same can be said of many European countries, where the credit crisis has exacerbated the situation. Also applies to the United States. The reason why Japan was the first in the list of concerns of rating agencies is the length and structural problems. With regard to duration, the Japanese debt to GDP ratio was already 170% before the credit crisis, because its original position was much worse. With regard to the structural side, Japan is already the largest proportion of the population older than 60 in the world (30.5%). Against the background of this proportion and the depletion of pensioners, soon, the public debt exceeds the financial assets of households. Foreign investors are likely to require more serious awards for possession of Japanese debt, which in itself will increase the debt burden through higher interest rates. Payments on interest rates has already taken away a quarter of tax revenues.
Thus, though it was a timely boost the yen, this is a timely warning to others about what level of debt is critical to the rating agencies (as well as bond markets) in the coming years.
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