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The JPY Records Further Advances against the Major Currencies
Recently, the JPY rallied against the USD and the EUR on speculation that slides in global stocks will prompt investors to sell higher-yielding assets and pay back loans in Japan. The Yen also advanced versus the New Zealand dollar and against the British pound, as U.S. lawmakers held off taking action on a bailout requested by the nation's automakers, spurring a reduction in so-called carry trades. A rise in U.S. jobless claims and a drop in manufacturing also helped boost the JPY. The Yen traded at 94.16 per USD from 93.69 late yesterday in New York, and at 117.13 per EUR from 116.68 yesterday.
As the global economy slows, the JPY and USD are likely to continue to strengthen against most other currencies in the world. Risky assets are also likely to remain under pressure, as long as the end of the global recession is not in sight. Japan's Interest Rate remains the lowest, which continues to prompts investors to invest more in the Yen. Investors are using this to their advantage in carry trades, in which investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the two. Japan's benchmark Interest Rate of 0.3% compares with 6.5% in New Zealand and 3% in the U.K. As investors are keen to continue cutting exposure to risk, and unwinding Yen-funded carry trades in the process, due to fears about forecasted global economic collapse, the Yen may extend its broad rally against the major currencies even further.
News Archives
| 20.11.2008 | JPY Strengthened by Unwinding Carry Trades |
| 19.11.2008 | Japan Enters Recession for the First Time Since 2001 |
| 18.11.2008 | Japan Enters Recession |
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