JPY Daily News

JPY's Strength Limiting Japan's Export Capability

On a powerful bullish run at the start of this week, the JPY is gaining on most of its currency rivals. This is not necessarily viewed as a positive from Japan's perspective, however. A strengthened Yen weakens Japan's ability to export goods; something which it has relied on heavily the past decade.

One of the driving factors, as has been stated numerous times the past few weeks, is the fear of unwinding carry trades. This event results in what many analysts call a repatriation of funds. The JPY, with its low interest rate, has historically been used to buy higher yielding currencies in order to fund carry trades. But as the Yen strengthens, and world interest rates lower, forcing the rollover yield of other currencies to drop, investors cut their JPY-funded trades which thereby floods Japan's market with its own currency and motivates traders to take buy positions on the JPY.

The bad news is that Japan relies on exports to fuel its economy. During these times of economic recession and financial crisis, a strengthening currency in Japan actually pushes its economy into a deeper recession instead of helping to bail it out. As global production and demand slows down, traders can expect to see this repatriation of JPY help to push the value of the Yen to new heights in the coming weeks.

Current Time: 05/26 22:31 GMT

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#	Time	$€£¥	Event	Per.	Prev.	Fore.	Act.	Imp.
12/01
	01:30	JPY	Average Cash Earnings	y/y	0.2%	0.1%	-0.1%
	04:30	JPY	BoJ Governor Shirakawa Speaks		*	*	*
	23:50	JPY	Monetary Base	y/y	1.4%	2.0%	1.9%