Forex in this article
“Stability is important, strong currency fluctuations are undesirable,” said Finance Minister Shunichi Suzuki on Tuesday in Tokyo’s parliament. “A weak yen has its advantages, but the disadvantages are greater in the current situation.” This would drive up the prices for crude oil and raw materials, which have already risen worldwide, even further in the third largest economy in the world. “It hurts consumers and businesses who can’t pass the cost on,” Suzuki said.
advertising
Trade forex now with up to 30 leverage
Trade forex with high leverage and small spreads. With only €100.00 you can benefit from the effect of €3,000 in capital!
Note on Plus500: 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Plus500UK Ltd is authorized and regulated by the Financial Conduct Authority (FRN 509909). Plus500CY Ltd is authorized and regulated by CySEC (#250/14).
The foreign exchange market took the finance minister’s verbal intervention calmly: the yen was at 127.80 against the dollar, its lowest level since May 2002. It has lost around ten percent against the dollar so far this year. One reason for this is the interest rate differential: In the USA, the Federal Reserve has abandoned its zero interest rate policy and signaled further interest rate hikes this year, while the Japanese monetary authorities want to maintain their extremely loose monetary policy. This makes the dollar more attractive to investors.
Suzuki declined to comment on how the government and central bank plan to respond to the yen’s weakness. Investors do not see verbal warnings as an appropriate antidote as the depreciation is reflected in economic fundamentals.
An April 1-11 survey of 5,400 Japanese companies by private economic research firm Tokyo Shoko Research found that about 40 percent are suffering from the negative effects of a weak yen. Central bank chief Haruhiko Kuroda has long touted the merits of a low yen exchange rate, as it makes Japanese products cheaper elsewhere and therefore more price-competitive. At the same time, however, it could also add to the already rising cost of importing fuel and food, at the expense of consumers’ purchasing power.
Tokyo (Reuters)
Image Sources: Lisa S. / Shutterstock.com, SNEHIT / Shutterstock.com