Japanese yen is rising today as Q3 GDP results indicate that Japan is recovering from the March 2011 earthquake and tsunami. Also boosting the yen today is safe haven demand as, once again, European stability is called into question.
Japanese economic growth showed annualized growth of 6% in Q3 of 2011, providing evidence that recovery is well underway from the earthquake and tsunami in March. Indeed, even though Japan’s economic growth is not expected to keep that pace, it shouldn’t be hindered too much, since reconstruction efforts should provide some support to the economy.
Also helping the Japanese yen today in Forex trading is the fact that the eurozone, once again, appears to be on the brink of disaster. Italian bond yields and Spanish bond yields are on the rise. The eurozone leaders don’t seem to have a solid solution to sovereign debt problems wracking the region. As a result, risk aversion is on the rise today, and the Japanese yen (along with the US dollar) is in demand as a safe haven.
Japanese leaders are likely to get nervous, though. A higher yen impacts exports, but leaders might be reluctant to intervene, since Japan has already interfered in the Forex market more than once.
At 14:44 GMT, USD/JPY is lower, down to 77.0164, down from the open at 77.2665. EUR/JPY is lower, down to 105.0295, from the open at 106.7150. GBP/JPY is lower at 122.6520, down from the open at 124.3250.
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