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January 25th 2007

G7 Meeting may cause Yen to appreciate

While its economy expands, its currency sinks. This is the conundrum that currently defines Japan. At this point, it is evident that the weakness in the Japanese Yen can be almost solely attributed to low interest rates, which have spurred countless traders to borrow in yen and invest in higher-yielding currencies, as part of a carry-trade strategy. It seems Japan is either unsure that its economy can withstand a rate hike-which would elevate its currency-or simply unwilling to take such a chance when a cheap currency is spurring export growth. In any event, the G7 will officially take up the issue at a conference next month in response to rising foreign criticism that Japan is artificially holding the Yen down. The Financial Times reports:

“European” concerns over yen weakness might may actually reflect French and Italian concerns and with Angela Merkel, German chancellor, playing down worries over euro strength, the “G7 factor” may not last.

Read More: G7 speculation fuels volatile yen

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Posted by Adam Kritzer | in Investing & Trading, Japanese Yen | No Comments »

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© 2004 - 2018 Forex Blog.org. Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.