The Yen remains strong against the Pound post-Brexit but the news this week that a Japanese company is buying the UK firm ARM has strengthened GBPJPY exchange rates.
GBPJPY rates have been recovering following the global uncertainty seen over the last 30 days. It is now nearly 8% cheaper to buy the JPY in comparison to only a week ago however still sits nearly 10% more expensive compared to before the UK’s decision to leave the EU. Following that decision the JPY was seen as one of the main beneficiaries with very high demand, and as a result of this large swing in value the Bank of Japan has had to make multiple statements and indeed intervene to help weaken their currencies value as a result of the economy being so heavily dependent on the export of its products.
This week the Japan Yen has become over 2% cheaper to buy following the news that a Japanese company is buying the UK firm ARM, this being in the billions of pounds. A Tokyo holiday yesterday has probably reduced the ‘fight-bank’ from Japan and therefore probably exacerbated the move, something that I expect to be retaken through this morning session.
The Yen has also been falling in value as speculation has been building of yet another round of stimulus to be introduced by the Bank of Japan. This new program of government spending is known as ‘helicopter money’ as it is not a lend of money which is paid back. Even though they will not literally be giving out free money from the sky. The essential feature of this new tool is that it increases the budget deficit which is financed by a permanent increase in the central bank’s monetary base, not by the issuance of government debt.
This new tool which could be confirmed as soon as their next meeting next week could easily weaken the YEN further giving buyers a better level.
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