the strength of the yen..worrying..

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villager
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the strength of the yen..worrying..

Post by villager » Thu Dec 04, 2008 9:19 am

I have been monitoring exchange rates of euro/pound vs yen,

the pound is down nearly 40% this year, and as japanese sellers have not adjusted their yen prices for guitars, the relative cost of guitars in Japan has risen by 40% for europe...has anyone else noticed this?

I have also noticed that very few guitars, priced as they were 12 months ago, are selling in Japan.

so the question is... how long will it take for the prices in yen, in Japan, to come down when the sellers realise nothing is selling, I have noticed that its already happening on Japanese auction sites, the prices, on average, have dropped around 15%, still a long way to go to make up the exchange rate difference though..

JohnA
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Post by JohnA » Thu Dec 04, 2008 9:30 am

I don't think the prices in Japan will drop that much furthur, most sellers would probably rather hang on to a guitar than take a 40% cut in asking price.

I do however expect the Yen's current strength not to last much longer. Japan's economy is primarily an export economy, they rely on export to bring cash in to the country. The current strength of the Yen while making life difficult for US/European buyers is causing major damage to the Japanese economy as big buisnesses look elsewhere for cars, TV's Cameras, Ships etc etc.

The Japanese government is in a state of panic over the strength of the Yen and are actively trying to weaken it???

None of this makes any sense to me, just what I've been told, but if it doesn't turn round quickly, high-end Japanese guitars are going to get pretty expensive in Europe :(

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Post by YOGA64 » Thu Dec 04, 2008 9:41 am

Yes, and nobody is going to buy them............. :roll:

Mick51
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Post by Mick51 » Thu Dec 04, 2008 10:44 am

JohnA wrote:I don't think the prices in Japan will drop that much further, most sellers would probably rather hang on to a guitar than take a 40% cut in asking price.
For any given seller: Is selling things a livelihood, or a sidelight?

If it's a sidelight, then I would agree with you; pull in the sail and ride out the waves.

If it's a livelihood, how long can you go without income? How much do you have tied up in inventory? What are your fixed vs variable costs? How long do you want to go between meals or mortgage payments?

I'm a big believer in price-demand elasticity. But, governments have a way of manipulating the markets in ways that don't always favor the little folk.

For Villager: I think you've got a pretty good reading of the situation. I have a feeling we will be in this "economic trough" for quite awhile.
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villager
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Post by villager » Thu Dec 04, 2008 10:48 am

yes i think all of next year will see higher prices in Japan,...
unless the Japanese devalue the yen in some way, which seems possible, sony have just announced a 33% rise in the cost for their products in the UK due to the yens strength, and thats going to kill their sales in europe...

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Post by JohnA » Thu Dec 04, 2008 11:05 am

Mick51 wrote:
JohnA wrote:I don't think the prices in Japan will drop that much further, most sellers would probably rather hang on to a guitar than take a 40% cut in asking price.
For any given seller: Is selling things a livelihood, or a sidelight?
quote]

Most of the used guitar market is private sellers wanting to cash in on the desirability of Japanese vintage guitars, If a private individual thought he could have made 200000 Yen selling his EGF whatever last month and this month finds out it's only worth 150000 he's likely to do what you or I would do and slide it back under the bed.


The big companies, Fender Japan, ESP etc primarily make guitars for the Japanese market, not for export, so there is no incentive to reduce their prices.

On the other hand, Sony putting prices up by 33% will have a big impact on the Japanese economy, something that will only be put right by a reduction in value of the Yen.

villager
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Post by villager » Thu Dec 04, 2008 11:38 am

and its not just sony, think of all the huge Japanese companies who's products have increased in price by 30 odd % this year, ..profit forecasts are right down, and the nikkai is tumbling...mostly due to the strong yen...

heh its crazy really...

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Post by Dave_Mc » Thu Dec 04, 2008 11:51 am

JohnA wrote:I do however expect the Yen's current strength not to last much longer. Japan's economy is primarily an export economy, they rely on export to bring cash in to the country. The current strength of the Yen while making life difficult for US/European buyers is causing major damage to the Japanese economy as big buisnesses look elsewhere for cars, TV's Cameras, Ships etc etc.
that's what i'd have thought. could be wrong, of course, i'm no economist, but if people can't afford to buy japanese-made stuff, unless 99% of their market is at home (which i doubt), the prices are going to have to fall, or the currency is going to have to devalue.

i've definitely noticed the strengthening yen over the last while- when i bought my edwards about a year ago, a pound bought ~240 yen. Now it's more like 150. :-? EDIT: just check xe.com, it's 136 today. :lol: no more edwardses for me! :lol:
Mick51 wrote:
JohnA wrote:I don't think the prices in Japan will drop that much further, most sellers would probably rather hang on to a guitar than take a 40% cut in asking price.
For any given seller: Is selling things a livelihood, or a sidelight?

If it's a sidelight, then I would agree with you; pull in the sail and ride out the waves.

If it's a livelihood, how long can you go without income? How much do you have tied up in inventory? What are your fixed vs variable costs? How long do you want to go between meals or mortgage payments?

I'm a big believer in price-demand elasticity. But, governments have a way of manipulating the markets in ways that don't always favor the little folk.

For Villager: I think you've got a pretty good reading of the situation. I have a feeling we will be in this "economic trough" for quite awhile.
good points :)

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Post by marcusnieman » Thu Dec 04, 2008 12:16 pm

1 USD$ = 92.68 yen

1 Pound Sterling = $1.47 USD$

1 Euro = $1.28 USD$

The dollar is down a bit against the yen but alot stronger against the Pound and Euro.

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Post by DaveWW » Thu Dec 04, 2008 12:24 pm

Yep,

Marcus is right. Japanese goods are most expensive to us in the UK. The Euro is a bit stronger and the Dollar stronger still. That's why I've noticed for a while that second hand resale prices are often lower in the UK at the moment than importing from Japan.

I'm of to Texas the week after next - normally I'd buy a guitar but at the moment I'm not sure I'll bother.


Dave

stratman323

Post by stratman323 » Thu Dec 04, 2008 12:57 pm

I'm far too stupid to understand exchange rates, but I would have thought that car sales, in particular, were a major part of the Japanese economy. But not all Japanese cars are made in Japan - I think it's Nissan who have a huge factory up near JohnA, & I think there are others too. Does this affect them? If not, they must be glad they have these other factories to rely on.

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Post by JohnA » Thu Dec 04, 2008 1:32 pm

stratman323 wrote:I'm far too stupid to understand exchange rates, but I would have thought that car sales, in particular, were a major part of the Japanese economy. But not all Japanese cars are made in Japan - I think it's Nissan who have a huge factory up near JohnA, & I think there are others too. Does this affect them? If not, they must be glad they have these other factories to rely on.
Yes it affects them in a big way!

If Nissan Sunderland was forecast to sell 1000 micra's a month at ?10,000 each that meant the parent company was rubbing hands waiting for 2300000 Yen each month, now they will be getting 1360000, so everyone in Sunderland will lose their jobs!!

stratman323

Post by stratman323 » Thu Dec 04, 2008 1:48 pm

Ah, even I can see that isn't good....

:(

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Post by bunbury » Thu Dec 04, 2008 2:44 pm

DaveWW wrote:Yep,

Marcus is right. Japanese goods are most expensive to us in the UK. The Euro is a bit stronger and the Dollar stronger still. That's why I've noticed for a while that second hand resale prices are often lower in the UK at the moment than importing from Japan.

I'm of to Texas the week after next - normally I'd buy a guitar but at the moment I'm not sure I'll bother.


Dave
I'm in the US a lot too. One good thing: In the past I used be constantly tempted by US guitar shops, now I can go and look - but the prices are so high in ?s that there's very little danger of spending money.

More seriously, the Japanese economy is surely vulnerable and Yen over-priced. It has to fall. But then the markets are bewilderingly irrational at the moment.

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Post by marcusnieman » Thu Dec 04, 2008 2:47 pm

bunbury wrote: But then the markets are bewilderingly irrational at the moment.
That is the understatement of the year. :wink:

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