Japanese yen is heading higher today, bouncing following a drop accompanying the latest Japanese election. With Shinzo Abe confirmed in the Prime Minister spot, it appears as though there is a stamp of approval for further measures that are likely to result in more weakness for the yen.
After a few years of political turmoil, the fact that Shinzo Abe remains the Prime Minister of Japan is a victory for some sort of political stability. Since the result was expected, however, the outcome of the Japanese election was largely priced in by Forex traders.
For now, the yen is gaining ground as traders look at the shambles that is the rest of the world. With eurozone debt on the rise, and uncertainty about what’s next in the United States (when will tapering really begin?), and continued problems with the United Kingdom, it’s little surprise that the yen is higher today.
But the gains are likely to be temporary. With Abe confirmed in his role, many expect economic reforms to continue in the vein of stimulus measures enacted by the Bank of Japan. This means the likelihood more monetary easing resulting in long-term weakness for the yen.
At 14:44 GMT USD/JPY is down to 99.4400 from the open at 100.4475. EUR/JPY is down to 131.2195 from the open at 131.9775. GBP/JPY is down to 152.8380 from the open at 153.3950.
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