Yen Higher Now, but Will It Last?

Yen is higher today, thanks in large part to the fact that China’s weak data is prompting strong risk aversion. Even though the yen is higher now, though, there are many who think that the yen will move lower in the future, due to the fact that the Japanese government is running out of options.

Right now, the yen seems to be correcting a little bit from its huge losses toward the end of last week. With the latest news out of China flattening stock markets around the world, and with risk appetite fading, the yen is getting some help, since it’s considered a stable bet.
However, the small strength seen today is not likely to last. Concerns about yen weakness for the rest of the decade are being voiced.
The latest GDP data out of Japan was disappointing, prompting more talk of the need for stimulus. It appears that the sales tax increase did more than expected to slow the economy, and now there are worries about the next scheduled tax increase. According to some estimates, the Japanese government would need 5 trillion yen to offset another increase.
All of that points to a weaker yen overall in the coming years.
At 10:44 GMT USD/JPY is down to 107.2410 from the open at 107.2050. EUR/JPY is down to 138.5578 from the open at 139.0750. GBP/JPY is down to 174.1850 from the open at 174.4950.

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