Why is the Yen a safe haven?
The tittle pretty much sums it up.
The media is reporting a 'Rush to haven' assets, such as gold and the yen. I understand why fear in the markets pushes the price of gold up but why is the haven currency the yen rather than the dollar?
Politically safe, zero inflation for the last 25 years and Japanese investors own more foreign assets than any other country in the world.
The notion of yen as a safe heaven stems from the usual behavior of Japanese investors. When the world looks shaky, Mrs Watanabe normally tends to repatriate (i.e. sells her foreign assets and converts the proceeds into yen). And, as the previous poster mentioned, Mrs Watanabe (and her various agents) owns a LOT of foreign assets.
In the last week? Massive risk off sentiment partly due to gyrations caused by Deutsche Bank and it's COCOs leading to stockmarket selloffs. USD IR projections unrealistic in current environment, and Yellen not adding anything of note the last two days. Asian holidays reducing liquidity. Also a beautiful H&S technical setup on the weekly USDJPY that added to the long JPY being the trade of the week. USD is still the safe haven, but as long USD is currently a crowded trade, when there are issues in the US (namely the FED's IR projections vs Mkt) you will get money flowing into other areas (EUR and JPY).
Thanks everyone, interesting responses.
Yen is cheap!
Japanese Yen (Originally Posted: 01/01/2013)
Why is it still so strong? How is the government going to avoid default unless it eventually devalues its currency (or experiences amazing gdp growth...unlikely) so wouldn't people be selling yen in anticipation of that?
lmgtfy http://www.economist.com/node/21542794
Japanese Yen/ Markets (Originally Posted: 01/23/2014)
I have an upcoming interview and realized my knowledge of what's going on with the Japanese yen and how it's affecting the markets is pretty lacking. Anyone have any good articles/summaries on it? thanks in advance
Here's a summary:
Shinzo abe off in this hoe Watch me ease it Watch me roll Watch me crank that shinzo abe Then super man that deflationary hoe Now watch me you (crank that shinzo abe) Now watch me you (crank that shinzo abe) Now watch me you (crank that shinzo abe) Now watch me you (crank that shinzo abe)
An Asian guy walks into the New York City currency exchange with 2000 yen and walks out with $72. Next week he walks in with 2000 yen and gets $66. He asks the lady why he gets less money this week than last week. The lady says "Fluctuations". The Asian guy storms out, and just before slamming the door, turns around and says: "Fluc you Amelicans too!"
i too agreed with your storey too!
You either go into that interview knowing how the yen market works or not knowing how any market works. You get the point?
Going Long Yen (Originally Posted: 03/14/2011)
What do you guys think about the direction of USDJPY in the coming months? I was thinking about going long yen (short usdjpy), mainly because of historical precedent (historical 15yr low in 1995 after Kobe earthquake), as well as Japan's $3trillion in net international assets which would expectedly be sold off to finance reconstruction of the country.
Risks: BoJ's injection of 15tn yen (printing money) as well as fx intervention (they'll want to keep the JPY down to aid recovery).
Separate question: I've read around that the carry trade is dead; rates still look pretty damn low in Japan though. Are investors afraid of financing their trades through Japan now, due to risks brought on by the 'quake?
Any thoughts on this would be greatly appreciated.
There's a shit ton of Japanese bonds set to be redeemed this month, around $190 billion i think and there's the risk that they'll keep it in cash for awhile so I'd be careful.
hmmm, I wouldn't... Short term wise, since the domestic saving exhausted in Japan, they need to bring capital from overseas for rebuilding. That may temporarily boost yen. However the insurance companies won't repatriate as much funds as market speculated, cuz the many properties are not insured from what I understand and hence bigger damage to Japanese economy (weak sign). Also, further spending causes even higher level debt to GDP ratio. Japanese just had an annual trade deficit first time in 28 years. That's also weak sign and a very important sign that yen shouldn't be weaker. I have been waiting since last year to short the yen.
I think you're right, it could be v-shaped (usdjpy and the economy) this year. Was also thinking about shorting EWJ, its been down 9% since Friday and well if its as bad as I think it is (worse than '95) we have another 20% to go.
Do you think the higher debt-to-GDP will cause investors to abandon the carry trade? Rates are still very low...but is there long-term risk in the JGB now? Looks like the long-end is steepening, but I can't see BoJ letting rates go loose.
Seems insensitive, I know, but I'd like to see this as a learning experience. Sadly, what's worse is that the Japan bears who shorted on a sovereign-debt thesis probably made good money on this terrible tragedy.
Go ahead and roll the dice.
Theres a reason vol is ridonkulous right now, no one has a clue what's going to happen.
A lot of Japanese-owned assets invested outside of Japan may end up flowing back into the yen (insurance, banks, pensions, etc) and the govt looks like they'll continue to buy securities, but that's only half of the supply/demand equation.
Around 80 is the ultimate resistance and whether it can punch through that line will gives us an important indication of its underlying strength. No idea how this will play out in the short run, but I'm a huge yen bear in the long run. I also think that getting past 80 will be tough because the BOJ will start intervening and unlike last time other countries can't say shit about it.
IMHO, another solution to finance the construction is to print cash, do u think is that possible? If yes, USD/JPY would have a support.
USDJPY just crashed.
I wish I had put my balls on the line...
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