How to define risk aversion

Beginner Questions
1

I have a question.
how to define risk aversion. why has the jpy been falling for so long when we have so many worries outside of it, such as evergrande, supply chains, fear of inflation, etc.

2

Any serious damage to the Chinese economy would badly impact Japan: China is Japan’s most important trade partner. Almost all Japan’s other important trade partners are also in SE Asia / the W Pacific and these also trade heavily with China, so negative impacts on their economies as fall-out from China’s economic issues would hit Japan as secondary damage.

Longer-term, the JPY has a negative interest rate, so on this perspective it costs banks to hold JPY in comparison with all other major currencies except CHF.

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3

So any bad news coming from China would typically mean the same for Japan and therefore affecting the yen? :open_mouth:

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4

The rising cost of energy prices has an adverse effect on JPY economy.

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5

An investor who prefers lower profits with known risks to larger returns with unknown risks is known as a risk averse investor. To put it another way, this investor always chooses the option with the lowest interest rate among multiple assets that yield the same return but have varying levels of risk.