HAMAMATSU SHI, Japan - April 22, 2016 - PRLog -- Taro Aso, the Finance Minister of Japan, has shown concern regarding the way Japan's currency, the Yen, is rising. Aso is of the opinion that a continued rise in the Yen may lead to a monetary fiasco and may cause the Japanese economy to stagnate. While the cabinet has been signalling at an intervention, the investors believe that Japan will stay away from any arbitrary intervention.
On Friday, the Japanese currency made an unprecedented climb. It reached 108 Yen per dollar -- this is the best the currency has done in the last 17 months. The Yen has performed especially well against the dollar -- since the start of the year, it has surged by 12% against the dollar. This can very well be attributed to the fall in the US dollar.
The Abenomics plan which was released by the Prime Minister of Japan, Shinzo Abes, aimed to bring down the Yen. A decrease in the value of Japanese currency would have led to an increase in exports and would have accelerated economic growth. However, as is evident, the plan is not working. More recently, the Prime Minister released a statement saying he will take necessary steps to regulate undesirable changes in the currency.
At the start of the year, the Bank of Japan had announced negative interest rates. This was done to bring down the Yen and thus, induce investments in the Japanese economy. However, the Yen took a different turn after the US dollar began to fall early this year and the Yen has emerged as a safe investment and thus, money managers are investing in it.
The Japanese Prime Minister also told reporters on Friday that an undesirable and unpredictable change in any currency is neither desirable nor wanted. For currencies to perform well, they should exhibit stability. And, such is the case with the Yen. He also said that excessive surges and unexpected investments disturb the economy. He also confirmed that the cabinet will step in and take necessary steps to ensure the stability of the Yen in case the need arises.
Gary Chambers, the Chief Investment Officer and Director of Corporate Trading with Fidea Wealth Management who oversees the management of $3.2 bn of clients' funds, said that the negative interest rates strategy employed by Japanese banks isn't working. The strategy isn't delivering the results it is expected to deliver. As a matter of fact, Chambers also said that negative interest rates are only adding to the rise in the value of the Yen.
More about this topic at http://fideawealthmanagementblog.blogspot.com/
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Yen continues to befuddle Japan and the World as the Dollar Trade Fades in Q2 2016
April 22, 2016 at 10:49 AM EDT
