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  • Apinya Kamon
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  • Last Posted: 2017-07-03 09:51:41
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Can We Find Solace in the Japanese Yen?

2017-05-06 02:56:23

You may desire to find the most suitable answer for this question. Can we find solace in Japanese yen?



Some emphasized the link between surge of the currency and risk aversion among markets is no longer relevant. We normally consider the price activities of the currency as a work of risk rather than a domestic economic action. The USD/JPY pair has established a formidable correlation with the S&P 500. However, the parallels have differed as of late. This currency is trekking an uphill path unlike major stock indexes such as the MSCI.



The inception of Abenomics paved the way for fast, relaxed monetary policy. Not to mention it drove an already devitalized yen. Also, the BOJ interference has never helped as it reduced the currency’s standing as a safe asset. Certain analysts mentioned the country’s monetary authority has lost its capability to devalue the currency and fulfill their responsibilities.



Rumors of cynicism have come full circle. Investors are getting into this concept head first. Touching on the BOJ’s inefficacy, cash is flowing freely into the yen. Central banks are bothered because of sharp currency surge. It has aggravated the worsening economic condition.



Remember the historic Brexit vote? That heightened global skepticism, but the yen scored significant advances last year. Following the event dwindled a bit, the volume of order for the currency declined and it escalated for EM and shares. Risk-on trades retained its ground. But the currency pulled back and hit post-Brexit throughs versus the greenback. The dynamics spurring the two currencies are somewhat under pressure, as the present levels have not been witnessed since 2013. When it moved past 100 versus the greenback after Britain’s EU exit, many were rattled. The second break is still surreal and it has been trading at that rate and pace way since last year.



Going back to the aforementioned question, can we find solace in the yen?



There is ongoing force wanting further plunge. Traders are going long on the Japanese currency and the above currency pair is still underrated. Shinzo Abe’s economic policies have done minimally to boost the overall worth of the yen. No is the answer.