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All About Yen!
By Mike Conlon | September 25, 2009
Another strong day for the yen today, up against all of the currency pairs commonly followed. Its particularly strong against GBP (+2.07), as I’ve noted over the last couple days the problems facing the Sterling. So while GBP and USD get all of the attention with their QE (quantitative easing) programs, the Yen just quietly chugs along.
A few factors helping the yen:
1) Speculation that Japanes companies (exporters) are repatriating their funds (profits). This is a seasonal factor that is supporting the yen right now.
2) From Bloomberg: “Japan’s Finance Minister Hirohisa Fujii reiterated his opposition to intervention in foreign-exchange markets to curb the yen’s gains yesterday. The yen has added 3 percent versus the dollar this month.” One of the biggest fears of yen traders is BOJ intervention, so this bodes well for the yen… for now.
3) The yen is being replaced in the “carry trade” as traders are now substituting USD as the vehicle of choice.
Overall, Japan hasn’t been affected as badly as the US and UK in the credit crisis, so look for JPY to benefit from the safe harbor trade.
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