A slew of very positive economic signs have buoyed the Japanese Yen, giving traders and investors a reason to be optimistic about its future. Japanese traders and investors have found that if they have the right tool at their disposal, they can use a foreign currency to trade currency pairs. The Japanese Yen is a valuable trading pair as a result. In the past, because of the weakness of other currencies, people who buy Yen would buy the same currency in other countries.
However, now, Japanese people can now trade their own currency by investing in stocks and bonds. That means that they can buy the Japanese Yen for the Japanese Yen and then sell them for US Dollars, thereby keeping some of the Yen to make money on other investment positions.
Now that this dynamic currency is as solid as it can be, people are coming to see the potential of the Japanese Yen, as a hedge in foreign currency trading. All of the good reasons outlined above have caused the Japanese Yen to appreciate this week.
The Japanese government does not have any plans to raise the interest rates of the Japanese Yen or its cash reserves. The Yen has appreciated this week. People, who previously would have turned to bond and stock markets for financial returns, are now doing so as well.
The Japanese government has also become nervous about the development of the Chinese economy. The US dollar index is up as well as the Japanese Yen, as China's economy has outpaced that of Japan.
Foreign trade is another reason why the Japanese Yen has appreciated this week. Since so many people are visiting the US for the summer, for more than three weeks, they are leaving with a significant amount of cash, which is simply sitting on the sidelines. While it is currently sitting idle, there is a strong possibility that the dollar is going to rebound.
The value of the Japanese Yen has risen significantly, because of the value of the US dollar and trade and tourism. These developments make the Japanese yen a currency hedge. When people come to the US and spend money, they want to make sure that they can access that money in the future.
When the value of the US dollar rises, it benefits everyone who invests in assets that will appreciate as well. This is the fundamental reason why the Japanese Yen has appreciated this week. A rise in the dollar value, and increased interest in foreign currency, are what the Japanese Yen has been designed to do.
When foreign exchange is good, the Japanese Yen has the ability to maintain its value. When people have a lot of cash at home, they are usually willing to pay a lot of money for a good security. When there is a lot of speculation and market activity, people are willing to pay for the comfort of having a stable currency.
While the dollar trends continue to move higher, the Yen is a very stable currency. In this environment, it may be wise to hold onto your Yen for the long-term, despite the negative currency movements currently.
Some of the best reasons for holding the Japanese Yen are as a hedge in foreign currency trading. If the dollar value rises, the Japanese Yen will have no problems staying on the positive side of the trend.