During the week 3rd Nov 12–7th Nov 12, the Japanese Yen held its ground against every other major currency that it was paired up with. This is despite
the looming general elections and BOJ toying with the idea of injecting money into the economy. How does that happen?
How’s anyone supposed to know what makes the market, or more to the point, the cow-herd mentality tick when such reports are supposed to weaken the Yen?
When, for example, reports indicate Euro has risen to 107 against the yen. Doesn’t that mean each Yen now costs 107 Euro cens which means the Euro has depreciated against the Yen?
this is a the kind of rise that actually means fall!!!
explain more about this… because the rise to the 107 means to me a stronger euro and weaker yen. if the japanese govt injects money into the economy (yen stimulus) wouldn’t this mean continual weakness of the yen? or does this mean stronger euro?
Japan has had economic issues for a very long time, going back as far as the dot com bust and its own property bust 10+ years ago. So why has its currency continued to strengthen in the last few years (post GFC) and into the Euro crisis? Because it’s a safe bet, in terms of shares considered a blue chip country when compared to its peers! Sure the returns are lousy but a relatively safe place to store your cash. This is the reason why both the US and YEN sometimes appreciate when damning economic/news reports come out of their own economies. The risk off trade kicks in and people ditch riskier currencies like the Aussie for safer currencies like the US and YEN. You have to also be aware that when the US and Japan release economic reports it not only relevant to US and Japan’s performance but also to the world because of the size of their economies.
[B]Example:[/B]
Australia and Canada are comdolls and therefore have higher risk. They are the BHP Billiton and BP’s of the world economy. Big strong companies however lack of diversity results in more risk.
The USA and Japan are massive conglomerates that have their hands in everything. Basically GE and Sony Corporation. Diverse companies that are profitable in several industries and generally able to adapt quickly. However even these two companies aren’t even fair examples when considering the size and strength of the USA and Japan’s economies.
N.B. BOJ has been trying to weaken (destroy) the YEN’s high value for a while now with mediocre results at best. The YEN is one of the most traded currencies in the world and thus even the central bank of Japan has limited power in controlling its value on the open market. :23: