The abbreviation for the Japanese Yen and the U.S. dollar cross rate is quoted as the JPY/USD. The currency pair shows how many Japanese Yen (the quote currency) are needed to purchase one U.S. dollar (the base currency). The symbol for the Japanese Yen is ¥. Trading the JPY/USD currency pair is also known as trading the “Gopher”.Yen is one of the most traded currencies in the world, due to its low interest rate; it is used in carry trades. Japanese Yen/U.S dollar exchange rate is a foreign exchange spot rate that regulated the relative values of two currencies. Both the exchange rate of the Japanese yen and the US dollar tend to decline if the Japanese yen depreciates. When the JPY/USD exchange rate increases, the value of the securities increases. Alternatively, when the Japanese Yen depreciates relative to the U.S. dollar, the U.S. dollar/Japanese Yen exchange rate increases.
When the JPY/USD exchange rate decreases, the value of the Securities also decreases. The JPY/USD exchange rate is determined by dividing one by the U.S. dollar/Japanese Yen exchange rate and curtailing the quotient to ten decimal places.
YEN ETF (EXCHANGE TRADE FUND)
Some Yen ETFs will match (with a dividend yield) the current income earned on the Yen assets, or may use that income to pay the expenses of managing the ETF.
Yen ETFs do not seek to maintain share price stability unlike basic money market funds. Performance is mainly guided by the performance of the Japanese Yen compared to the U.S. dollar. The Japanese yen is one of the most traded currencies in the world, along with the dollar and the euro. Due to Japan’s history of low interest rates, it makes it a sought after currency for borrowing, but the borrowed funds are often used to invest in foreign securities and debt.
Despite the fracas of the Japanese economy in the 21st century, the Yen remains a safe haven currency, meaning in times of investor stress or market turmoil, the Japanese yen depreciates, that is, the Yen tends to weaken when the global economy is strong and stock markets are moving higher.
Traditionally, the JPY/USD has been known as a currency pair due to its close correlation with U.S. treasuries. When treasury bonds, notes, and bills increase, JPY/USD prices weaken. This is a long position. The logic is that the U.S. would never neglect onits bond obligations, known as defensive assets; hence its safe haven status is secure.
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