Expect downward pressure on the JPY going forward – NAB

By FXStreet Research Team at NAB, notes that the Japan’s foreign exchange reserves remain high, and at USD1.25 trillion are the second highest in the world, after China.

Key Quotes

“Taken together, the high level of FX reserves, the strong Net International Investment position and the high Current account surplus point to a very strong external position. This has helped cement Japan’s reputation as a safe haven during times of market turbulence.

In fact, this helps explain – in part – the strength of the JPY (Japanese Yen) during the recent period of market ructions. The JPY had been trading above 120 during 2015. However, it has strengthened considerably during 2016. The decision to adopt negative interest rates led to a brief surge in the JPY above 120. However, such a move proved fleeting, and the JPY strengthened in a general risk-off environment. The JPY has appreciated by around 11% since its trough around mid 2015.

The JPY has also appreciated against the Korean Won (KRW), rising by 14% since the lows in June 2015. More recently, JPY has reversed some of its prior appreciation against the KRW. The KRW has strengthened in March as global players turned net buyers of Korean stocks and bonds, encouraged …read more

Source:: FX Street