The Yen on a steep upward climb
November 12, 2009, 1217 GMT
The JPY is edging higher in today’s trade against all major traded currencies and it may just be on the way to test the 14-year high as the global economy is looking like it will bottom out the second time this year after a brief rally. It could be an excellent opportunity for investors to go long as the Yen already touched a high of 88.01 (JPY/USD) in the 1st week of October, the highest level since Jan ‘09 this year and could be trading at 85 by March ‘10.
The Yen opened at 89.839, and is currently trading 89.795, having made a high so far today of 89.97.
The upside momentum comes from risk aversion by investors as they park funds in safe haven currencies such as the JPY. The recent global recovery has mainly taken place because of stimulus spending by the governments of various countries, a plan which is not sustainable for long as most countries have already started withdrawing stimuli gradually.
Ultimately, the demand for high-yielding currencies should diminish, resulting in the strengthening of the JPY. Benchmark interest rates are the lowest in Japan at 0.1%, making JPY the most preferred currency for carry trades.
Loading ...
