The recent years have been full of surprises. Recalling the most recent market events, they have not only succeeded in throwing the investor community off-guard but have also been fairly responsible for shaping the current scenarios (as I write this post).
From the China market crash in August last year to drop in oil to almost at knee-levels, the stock and forex markets together are going through a “swing” moment ! Even the traditional currencies such as the dollar and the Euro that once held a stronger position are finding trouble in projecting themselves as “favourables”. Amidst this, forex has found some star performing currencies that could slightly ease the pressure off from the traders, in particular. One such performer is the Yen !
Yen advances to a 15-month high against the Dollar
According to the article posted by the m.themalaymailonline.com, Yen rose to a 15 month high at 110.27, appreciating the Japanese Yen by 0.7% against the dollar. The levels are believed to be the strongest since October 2014.
Japan which is known for pushing inflation as its key concern, an appreciating currency would mean a slowing economy for the Japan’s administrative bodies.
In an attempt to revive the economy, the Bank Of Japan (BOJ) is reported to have been advocating for rate cuts. But this can’t be seen as an effective measure for the Yen. Despite the bank’s intervention in weakening the currency, yen has been listed amongst the “best performing Group 10 currencies” surging by 9% this year.
Factors driving the Yen to rise
The key factor that is driving the surge are the slowing economies of China and the Europe, fall in oil prices and a weak dollar. These events are forcing investors to abandon stocks and look for safer havens like bonds and Yen, thereby pushing the demand for the currency.
“About $7.9 trillion has been wiped from global stocks in 2016, while around 30 percent of global sovereign bonds — another relatively safe asset — now yield less than zero”, as quoted in a report published by Bloomberg.
Also, the certainty that yen could further grow stronger as highlighted by many top analysts point out to a trading opportunity of banking on this currency.
