Bank Of Japan Prepares To Execute an Intervention

By James McKee

The Japanese Yen has begun to rise against other major currencies, and this signals some progress in the Bank Of Japan’s efforts regarding devaluing of the Yen so as to curb inflation in an effort to increase export revenues. Japan relies heavily on their exports and their economy would suffer more than nearly any other would if inflation gets out of control. What has already occurred in Japan has shut down factories and caused higher unemployment, and in turn a rise in prices and poverty in Japan. The number of poor people in Japan has also risen prompting the government to step in with various social programs in an effort to stem the flow of financial emergencies in the country.

The Bank Of Japan has lowered the interest rates as close to zero as it ever has, despite this the JPY remains virtually unchanged. This is a bad sign for Japan because their central bank is almost out of moves to make on their behalf. The United States is currently unable to bail Japan out in light of its own financial meltdown.

The Yen dropped slightly today but a correction is likely in the near future. Avoid pairing the Yen with the USD because the USD has been in some serious trouble as of late. The CHF still has some steam in it from the recent decreases in their unemployment rate, considering Switzerland is relatively stable at the moment it is a great currency to pair with the JPY. It is always best to pair the JPY with the most stable currency available since the JPY tends to be one of the most volatile currencies in the market. Those on the forex currency exchange should watch the bank of Japan carefully for any new developments and stay up to date on any changes.