Steve Eakins
Director
Yen’s safe haven status put to the test
As investors look to less traditional safe haven currencies amid geopolitical uncertainty, the Yen’s demand has been increasing over the past 2 weeks.
This Japanese Yen report will address the factors that are likely to affect exchange rates in the short term if you are buying abroad or making a currency transfer.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP/JPY | 1.5% | JPY 420,000 |
World events drive demand for the Japanese Yen
Japan, which is the world’s third largest economy, showed unexpected signs of strength over the summer. Business confidence recently came out at a 25 year high and the economy has just posted its longest unbroken period of growth in more than a decade.
Over the last two weeks however there have been large swings in the value of the JPY as the title of safe haven has been put to the test. Trading GBPJPY over the fortnight has changed by nearly 2% which has been driven by the flow in and out of the JPY as global events have dramatically changed the demand for the safe haven currency.
Even when North Korea’s missile flew over Japan the Yen remains in demand as investors scrambled for the havens amid escalation fears of conflict in the region. The storms that have hit the Americas have driven funds out of the USD and into the Yen further too. If the situation in the Korean peninsula continues to deteriorate, jittery investors could continue to snap up the Yen, which is something that clients with exposure to the currency should keep at the forefront of their minds.
GBP/JPY exchange rate forecast for next week
Moving forward I personally expect the volatility to remain meaning the timing of a GBPJPY transfer will continue to be very important. I generally expect the JPY to get more expensive as the domestic Brexit talks continue to impact the value of the Pound.
Japan’s banking policy is also expected to show improvements.
The stronger picture suggests that Prime Minister Shinzo Abe’s economic stimulus programme, so-called Abenomics may finally, be kicking in. This is the strategy expected to fight the countries high balance sheets and deflation concerns.
In the short term we are expecting Japanese Trade Balance figures on Sunday evening. This is expected to show another improvement for Japan, making buying the Yen more expensive as we start the new week.
Call our office on 01494 725 353 for more information on how future data releases could affect your currency requirement.
