The yen started this week climbing versus several higher-yielding currencies worldwide as Asian stocks declined today, spurring demand for the safety of the yen, which is also benefiting from a new elected party in Japan, renewing hopes for the nation’s socioeconomic future.
A new ruling party was elected this weekend in Japan leading speculators to believe that foreign investors will once again inject capital in the country, since the opposition Democratic Party of Japan brings new hopes for the country which posted last week the highest unemployment rate since the Second World War. Stocks in Asia declined sharply led by the Shanghai Composite Index which declined more than 6 percent, spurring demand for safety among traders and setting the Japanese currency to the highest rate versus the euro in more than a month.
Despite Japanese elections with the opposition party coming out as a winner, the yen’s rise is mostly due to risk aversion, according to analysts. Stocks and other high-yielding assets climbed substantially and the fundamentals are not as positive to provide a solid support for intense bullish days as those witnessed during the past two months. High volatility is still expected for the yen pairs as the future of most global economic regions remains very uncertain.
EUR/JPY traded at 132.90 as of 9:33 GMT from an opening rate this week of 133.71. AUD/JPY traded at 77.97 from 78.71.
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