SUBSCRIBE TO FEEDIn recent years, the Japanese Yen has been one of the most popular foreign currencies traded against the U.S. Dollar. Japan’s relatively conservative and stable economy, coupled with one of the most well managed banking systems in the world, has made the Yen a sought after currency and a yardstick for security in an often volatile world economic environment.
Following the peak rates of the U.S. Dollar in the mid 1980′s, the Yen has been a currency on the move, rising from a rate of 260 Y against the Dollar in early 1985, to a rate of 89 Y less than two years later. Though the Dollar has managed to recover some ground against the Yen, largely due to a marked softening of the Japanese economy in the early 2,000′s, the Yen has again risen somewhat against the U.S. currency and presently stands at around Y 113 to the Dollar. Japanese interest rates,. reportedly some of the lowest in the world, have risen a bit, and their Prime Lending Rate now stands at 0.5% . This extremely low rate does not effect the Yen’s strength as the country’s improving economy, and high trade surplus against the U.S.A., Japan’s largest trading partner, has made the Yen a very stable world currency.
Recent stock market upheavals have not effected the Yens’ value as much as a weakening of other work economies, mot notably that of the U.S.A.
FOREX trading in Japanese Yen is similar to trading in other currencies, except that one must take the Yen’s trading value into consideration Many European currencies, notably the Belgian Franc, Italian Lira, Austrian Schilling, and Spanish Peseta did away with 3 and 4 digit currencies when they switched to the Euro in 1999. The Yen is perhaps the only ‘strong currency’ that retains such a high monetary unit value against the Dollar and other strong currencies such as the Pound Sterling and Swiss Franc
As in Dollar/Euro currency trading, a minimum account balance must be on hand to be able to trade in Yen on a margin basis. A margin contract is then agreed up in which the contract amount will be redeemed in a period of 30 to 90o days. Longer periods are allowed, but at different interest rates and subject to contract redemption conditions. When the contract is redeemed in anywhere from 30 to 180 days, the difference between the Yen/Dollar rate at the time of redemption is calculated against the Yens’ value at the time the contract was initiated. In this manner, it is easy to determine whether there as a profit or a loss.
Recent American economic problems, including the mortgage loan lending crises has resulted in more demand for Dollar sales and Yen and Euro purchases. In the sort run, “moving into Yen” is being considered a wise and safe move by economic and monetary advisors.
