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Home / Analytics / Forex analysis & forecasts / Forex Fundamental analysis / The yen strengthened too much. Overview for 12.02.2016
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The yen strengthened too much. Overview for 12.02.2016

Two-week sales in the USD/JPY pair led the instrument into the area of the minimums of the last fifteen months.

The Japanese yen strengthened too much with other input: the local regulator is struggling with the "revival" of inflation and fixing it near the mark of 2%, while the currency market is preventing this work. The current quote in the USD/JPY pair is 112.49, and this is at the minimum of the past fifteen months.

Today the head of the Bank of Japan Mr. Kuroda said that the regulator is closely monitoring market fluctuations, and the tactics of withdrawal of investors from risks and moving into the "safe havens". He stressed that the recent facts of the growth of the yen are not related to the Central Bank decision to introduce a method of negative interest rates. Cautious optimism in the ranks of the Central Bank is maintained. Although it is not much to go on.

Movements not associated with the decision of the Central Bank do not mean that they do not interfere with the market and the economy. An expensive yen negates all financial "bonuses" from the current economic situation for exporters, for example. Less proceeds from export sales - lower budget revenues. An expensive yen is now very "inconvenient" for Japan.

With everything else, it is perfectly evident that the tactics of negative interest rates can not be carried out for a long time. It is expensive for the Central Bank, and also has little incentive effect for the banking sector. Here it is worth paying attention to a new wave of "risk aversion" - the dollar also looks weak against the euro, despite the unstable economic situation in the euro area. It seems that around the USD a set of problems has formed that will soon affect all capital markets without exception.
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