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Yen’s Slide

The Korean won, Singapore dollars and other Asian currencies are being unloaded by investors in their anticipation that the Yens continued slide against the U.S dollar will echo through the regions foreign exchange markets according to reports in the Wall Street Journal. The Yen has had a significant drop against the dollar since the Bank of Japan surprised markets by introducing a new monetary stimulus package on October 31. The fear across Asia is a weak Yen will allow Japanese exporters to gain market share so investors wager that to be competitive that central banks across the region will allow their currencies to weaken to stay competitive. So far the South Korean wan has been the biggest casualty dropping over 5% since the Oct 31 announcement.  Korean companies compete directly with Japan in technology and automobiles.  The Yen’s decline may impact how Japanese companies invest money. The weakened Yen will encourage investment in the home country where the money will go further instead of overseas where the Yen won’t go as far. Some economists say Asian currencies form a  “Yen bloc” in which they rise and fall against the dollar in similar fashion to the yen due to strong trade and investment ties between different countries and Japan. Many investors say the dollar not the yen, is still the main driver or Asian currencies. As we are seeing the dollar strengthening against most currencies this as an economic recovery in the U.S outshines growth in other major economies.

Content presented by Barry Sendach President of Forex Global Solutions

Quote of the day: Don't be afraid to give your best to what seemingly are small jobs. Every time you conquer one it makes you that much stronger. If you do the little jobs well, the big ones will tend to take care of themselves. Dale Carnegie

Friday, 21 Nov, 2014 / 6:38

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