Japanese Yen: What Affects Its Value And How To Trade It – Kavan Choksi
The Japanese yen is one of the most commonly traded currencies in the world. It is also one of the most volatile, which means that its value can change rapidly from day to day. There are a number of factors that can affect the value of the yen, and it is important to understand these factors if you want to trade this currency successfully. In this blog post, experts like Kavan Choksi will discuss what affects the value of the yen and how you can trade it effectively!
What is the Japanese yen and what are its origins?
The Japanese yen is the official currency of Japan. It was first introduced in 1873, and it has been used as the country’s primary currency ever since. The yen is divided into 100 subunits called sen.
What affects the value of the Japanese yen?
There are a number of factors that can affect the value of the yen. These include:
1) The state of the Japanese economy: The Japanese economy is one of the largest in the world, and it has a significant impact on the value of the yen. If the economy is doing well, the yen will usually strengthen against other currencies. However, if the economy is struggling, the yen will usually weaken.
2) Japanese interest rates: Interest rates play a major role in currency valuation. Higher interest rates tend to attract more foreign investment, which leads to a strengthening of the currency. Conversely, lower interest rates lead to a weakening of the currency.
3) The Bank of Japan’s monetary policy: The Bank of Japan (BOJ) is the central bank of Japan. It sets monetary policy for the country, and this policy can have a significant impact on the value of the yen. For example, if the BOJ decides to increase interest rates, this will usually lead to a strengthening of the yen.
4) Geopolitical factors: Geopolitical factors can also affect the value of the yen. For example, if there is tension in the Korean Peninsula, this could lead to a strengthening of the yen as investors seek out safe-haven assets.
5) The price of oil: Japan is a major importer of oil, and the price of oil can have a significant impact on the Japanese economy. If the price of oil rises, this will usually lead to a weakening of the yen, as the country’s import costs increase. Conversely, if the price of oil falls, this will usually lead to a strengthening of the yen, as the country’s import costs decrease.
How can you trade the Japanese yen?
There are a number of ways to trade the Japanese yen. The most common way is through currency pairs, where you would buy or sell the yen against another currency, such as the US dollar or the euro. You can also trade the yen through CFDs or spread betting.
When trading any currency, it is important to be aware of the factors that can affect its value. This is especially true for the Japanese yen, which is a highly volatile currency. By understanding the factors that can affect the yen’s value, you can be better prepared to make successful trades.