No Result
View All Result
Markets
EUR/USD GBP/USD USD/JPY AUD/USD NZD/USD XAU/USD
Central Banks
FED ECB BoE BoC BoJ SNB RBA RBNZ
Brokers
Wire Transfer Visa/Mastercard Paypal Fasapay Skrill Bitcoin
FCA Cysec CFTC NFA FSA
Forex Guide
Beginners Basics Technicals Fundamentals
Education
Forex Articles Forex School Forex Terms
Forex Strategies
5 Minutes 15 Minutes 30 Minutes 1 Hours 4 Hours Daily
Resources
Indicators Forex Ebooks MT4 MT5
Trading Tools
Live Charts Economic Calendar Fibonacci Calc Pivot Points
Mira FX
  • Markets
  • Education
  • Central Banks
  • Resources
    • Ebooks
    • Indicators
      • MT4 Indicators
      • MT5 Indicators
  • Brokers
    • Deposit Bonuses
    • No-Deposit
    • Demo Contest
    • Live Contest
    • Brokers News
  • Tools
  • Login
  • Deposit Bonuses
  • No-Deposit Bonuses
  • Demo Contest
  • Live Contest
  • Brokers News
  • Brokers
Mira FX
  • Markets
  • Education
  • Central Banks
  • Resources
    • Ebooks
    • Indicators
      • MT4 Indicators
      • MT5 Indicators
  • Brokers
    • Deposit Bonuses
    • No-Deposit
    • Demo Contest
    • Live Contest
    • Brokers News
  • Tools
Mira FX
  • Markets
  • Education
  • Central Banks
  • Resources
  • Brokers
  • Tools
  Latest
How To Install Metatrader 5 Custom Indicators May 9, 2022
Next
Prev

Falling Japanese yen as canary of a changing world order

User by User
March 24, 2022
in Forex News
Reading Time: 2 mins read
ShareTweetShareSendShareSend

The collapse of the Japanese yen continues, and so far, there are no signs of a trend reversal.

The rise in the Yen is often linked to capital flight from risky assets, and the weakening is a sign of increased demand for risky assets.

But that explanation hardly fits with what is happening now. We likely see the start of a significant reassessment by the markets of Japan’s position in the financial system.

In a worst-case scenario, this may turn into a debt crisis in the Land of the Rising Sun and be an even bigger disaster for financial markets than the eurozone debt crisis of a decade ago.

The starting point for the weakening of the Yen was at the start of February. At that time, equities were in demand as a haven for capital to maintain the purchasing power of investments.

The flow into equities was interrupted by the war in Ukraine but accelerated in the last couple of weeks on signs that these events have hyped up the processes that were taking place before.

And these processes are now most visible in the dynamics of the Japanese yen against those currencies where the central bank can respond adequately to inflation.

Since the start of February, the USDJPY has risen by 6.5%, and almost all this increase has taken place since March 7th, taking the pair back to levels last seen at the end of 2015.

A much more impressive rally is taking place in the Aussie and Kiwi against the Yen. Since the start of February, they have soared by more than 12%. So far this month, the strengthening is the largest in 11 years for AUDJPY and in more than 12 years for NZDJPY.

The interest rate differential game, which was so beloved by traders in Japan before the global financial crisis, has found a second life.

Australia and New Zealand have the economic potential to raise interest rates, as they are experiencing a surge in exports due to the boom in their export prices.

However, the situation in Japan looks considerably more alarming, as Japan’s debt-to-GDP ratio has risen by 77 percentage points to 170% since the financial crisis. Permanent QE from the Bank of Japan has kept government debt costs down but doesn’t solve the problem.

In the last decade, Japan has turned into a net commodity importer due to its growing dependence on energy and metals and increasing competition from China and Korea. The exchange rate should act as a natural mechanism to stabilise trade in this situation.

But this adjustment is difficult for debt-laden Japan because selling currency would de facto mean selling bonds denominated in that currency.

Under these circumstances, the Bank of Japan either must openly accept that it will finance the government (i.e., increase purchases despite inflation) or soften QE. The first option risks triggering a historic revaluation of the Yen.

The second option would deal a blow to the economy and finances by raising questions about whether Japan can service its debt.

Channel: FxPro - Broker
Foundation: 2006 | Regulation: CySEC, FCA, FSCA, SCB | Min. Deposit: $100
FxPro offers Contracts for Difference (CFDs) on 6 asset classes: Forex, Shares, Spot Indices, Futures, Spot Metals, and Spot Energies. Provide for all clients with access to top-tier liquidity and advanced trade execution with no dealing desk intervention.
Tags: AUD/JPYFxProJPYNZD/JPY
ⓘ Some contents provide links to third-party news and current events as a convenience to you. We have not reviewed and don't endorse the contents of these sites. Please always do your own research. Mira FX does not endorse any companies, products or services which are represented on this article. Mira FX is not liable for any damage or loss, including but not limited to, any loss of investment, which may be based either directly orindirectly on the use of or reliance on such information. Before deciding whether or not to take part in foreign exchange or financial markets or any other type of financial instrument, please carefully consider your investment objectives, level of experience and risk appetite.

Latest

Gross Domestic Product, First Quarter 2022

Gross Domestic Product, First Quarter 2022

APR 28, 2022 | USD
gbp currency news

The pound reacts to rising inflation like EM currency

Apr 13, 2022 | GBP/USD
rbnz rates hike

NZD falls despite RBNZ rate hike

Apr 13, 2022 | NZD, RBNZ
gbp news today

GBP/USD is still falling and slowly approaching the lows

Apr 12, 2022 | GBP/USD
IMF: Dangerous Global Debt Burden Requires Decisive Cooperation

IMF: Dangerous Global Debt Burden Requires Decisive Cooperation

Apr 11, 2022
usd news today

Central Banks and Inflation (11 – 15 April)

Apr 11, 2022 | GBP, USD, NZD
Advertisement

Latest

How To Install Metatrader 5 Custom Indicators

How To Install Metatrader 5 Custom Indicators

MIRA TEAM - May 9 | Basic

Gross Domestic Product, First Quarter 2022

APR 28, 2022 | USD

The pound reacts to rising inflation like EM currency

Apr 13, 2022 | GBP/USD

NZD falls despite RBNZ rate hike

Apr 13, 2022 | NZD, RBNZ

GBP/USD is still falling and slowly approaching the lows

Apr 12, 2022 | GBP/USD

IMF: Dangerous Global Debt Burden Requires Decisive Cooperation

Apr 11, 2022
Advertisement
  • About
  • Advertising
  • Disclaimer
  • Contact
  • Privacy Policy
  • Terms & Conditions
Risk Warning: All information on this website, including any opinions, articles, charts, prices, news, data, Buy/Sell signals, reviews, research and analysis is provided as general market commentary and does not constitute any investment advice. Mira FX is not liable for any damage or loss, including but not limited to, any loss of investment, which may be based either directly orindirectly on the use of or reliance on such information. Before deciding whether or not to take part in foreign exchange or financial markets or any other type of financial instrument, please carefully consider your investment objectives, level of experience and risk appetite. Do not invest more money than you can afford to lose. Note that the high level of leverage in forex trading may work against you as well as for you. Please seek advice of an independent financial advisor if you are not fully aware about the risks associated with foreign exchange trading. Forex trading on margin involves considerable exposure to high risk, and may not be suitable for all investors. Mira FX does not endorse any companies, products or services which are represented on Mira-FX.com The information on this website is subject to change without notice.
No Result
View All Result
  • About
  • Advertising
  • Central Banks
  • Contact
  • Disclaimer
  • Forex Brokers
    • Regulator
  • Index
    • Daily Forex Strategy
    • Forex Ebooks | Language: English
    • H1 Forex Strategy
    • H4 Forex Strategy
    • M15 Forex Strategy
    • M30 Forex Strategy
    • M5 Forex Strategy
  • Markets
    • EUR/JPY
  • Mira FX
  • Privacy Policy
  • Terms & Conditions
  • Tools
    • Economic Calendar
    • Fibonacci Retracement Calculator
    • Live Charts
    • Pivot Point Calculator

© 2022 Mira FX | Copying of materials is allowed only with the presence of an active link to a source page.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In