JPY Daily News

JPY Post Sharp Drops from Unwinding Carry Trades

After a week of tremendous bullish trends, the Japanese leadership is giving worrying signals to the JPY's overvaluation. Yesterday French Finance Minister, Christine Lagarde, said that the Japanese administration is considering getting actively involved in the foreign exchange market for the first time in four years, and that the Bank of Japan may begin selling Yen on the open market in the near future.


The unwinding of carry trades that have traditionally used large amounts of leverage have pushed the JPY higher to levels not seen before. As investors buy back JPY that they originally borrowed in, the JPY has seen abnormal gains. The Japanese government faces the difficult task of estimating how much more deleveraging exists in the market and when to begin selling the JPY in order to lower the exchange rate.


There are real concerns in Japan that the exporting sector will be sharply damaged by a stronger JPY, and considering the already poor outlook of the Japanese economy, such reaction could be lethal. It seems that Japan won't accept the current value of the JPY, and will act to bring it back to a more comfortable level. Traders should take very seriously any statement on that issue and follow these developments very carefully, as they could generate a new trend in the market.

Current Time: 05/26 21:55 GMT

Add events to google calendar Mark all Unmark all Print

#	Time	$€£¥	Event	Per.	Prev.	Fore.	Act.	Imp.
10/28
	23:50	JPY	Prelim Industrial Production	m/m	-3.5%	0.5%	1.2%