Since 2008, when the global financial crisis took place, the Japanese Yen has been commonly accepted as a dependable reserve currency. It has been considered to be the world’s most prominent “safe haven” currency primarily due to its low bid-ask spread and high liquidity. Both new and experienced traders in the Forex market have favored the Yen.
Kavan Choksi Japan- The value of the USD/JPY pairing in the forex market
Kavan Choksi Japan is an eminent investor, wealth consultant, and business management expert highly respected for his abundant knowledge in finance and economics. In his opinion, he says that the USD/JPY pairing has always had a crucial role in activity trading in the Asian markets as the Yen currency was always purchased and sold as a reliable substitute for the other unpredictable currencies of the globe.
The Central Bank of Japan and its monetary policy can impact the Yen
However, in the early part of 2022, the Yen, unfortunately, experienced a very brief spell of a 24-year drop in value in the forex markets as inflation soared in many economies of the globe, stocks dropped across the world and the Ukraine-Russia crisis. Many traders wondered during these events whether the Japanese Yen had lost its “once upon a time” safe haven currency status. In 2022, the value of the Japanese Yen briefly dropped to about 11% against the rising USD- this gave traders an insight into how global inflation can also affect the quality pairing of the USD/JPY currencies and how the monetary policies of the Central Bank of Japan can impact the Yen.
The value of the U.S. dollar
The value of the U.S. dollar holds steady even after reports released by the U.S. Census Bureau stated that the retail sales in the nation still remained flat in July, missing estimates for a slight 0.1% rise after an unexpected growth in sales in June.
The sales of vehicles and their parts also faced a decline of about 1.6% in the month of July after it rose by about 0.5% during June. The control group sales increased by 0.8% this year from June to July, despite predictions in the market that there will be just a mere rise of 0.6%.
Kavan Choksi Japan states that because the JPY is a crucial reserve currency in Asia, traders view its high liquidity to be an advantage to capitalize on the market movement in nations whose local currencies are a challenge to trade with, mainly if conducted in large volumes. This is why traders must study the factors that affect the currency market in the world today to check how they affect the movement of the Japanese Yen and its price.
One of the most significant benefits of USD/JPY trading is the high liquidity that traders face daily. This feature of the pair generates market volatility that gives them regular opportunities for trading. Because the USD/JPY is potently correlated to the commodities market in Japan, the price swing that is made by the liquidity of the pair makes its movements simpler to predict over the other currency pairs in the market.
