The Japanese Yen continues to strengthen as investors move to safe-haven currencies ahead of the referendum.
After the Bank of Japan’s (BOJ) decision early Thursday to not implement additional monetry easing measures, the yen has surged in value sharply. This has been across the board against a basket of currencies including the US Dollar, Euro and Pound.
As the worlds markets await the outcome of the UK EU vote later this week, it is the pound which has seen the biggest swing in value against the Yen, generally weakening. The Yen has benefited from its status as a safe haven currency ahead of this risky event meaning funds from around the world has been moved into the Yen.
Buying the JPY with Sterling as a result has got in excess of 7% more expensive over the last 30 days.
The BOJ is normally rather vocal and happy to intervene in its currencies value due to its impact on the competitiveness of its largely export based economy but it has remained mute of late. The last meeting which took place on Friday by the top currency officials said that they had agreed that the Yen’s volatility was increasing and that they would remain in close contact.
At this point they would have to intervene to weaken its currency. This I think will not be the case if we see a Leave result in the UK with more money flying into the YEN.
The market currently sits close to 150 which is the most expensive seen for over two years. I am of the view that the building concerns may yet drive more yen strength. I expect the Yen to get continually more expensive to buy as we get closer to this Thursday event.
Anyone with Yen exposure should keep a keen eye on the decision the UK population makes at the end of this week as this could have a significant and long lasting impact on the value of the Yen.
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