The Strong Yen

The Yen can benefit from a quirk in the markets.  Because it has such low rates, traders and investors typically take out loans in Japan and exchange the proceeds for higher-yielding bonds from nations such as Australia, New Zealand, and Brazil.  In times of global economic turmoil, like now, traders reverse these bets.  As a result, money flows back into Japan as the loans are paid off, triggering a rise in the Yen.

An element supporting the Yen is that Japan records huge trade surpluses with the U.S. – more than US$28 billion in 2009.  The country’s deflationary domestic economy is weak, but the Japanese export machine beats anything a weakened America or Europe has to offer.

The Yen is strong because the U.S. and Europe are in the tank.


About Andre

Experience Business Developer & Alliance Partner Manager with Strong Technical Background Dealing with Complex Solutions
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