It is important to understand that the value of anything, especially currencies, is based on perception. The Japanese yen has been strong for so long, but why?
Figures from the UK’s Investment Management Association (IMA) show that Japanese equities have been hot over the past year as money has been sucked out of Europe, the UK and the US. It makes sense that investors have been speculating in developing Asian economies, but Japan is a surprise – it’s suffering from demographic and debt issues.
One reason for Japan’s continued strength seems to be the success of Japanese companies in Asian markets. Nearly 60% of Japanese exports are going to Asia and emerging markets instead of the US and Europe.
This is a current trend, not an irrevocable fact. Asia’s growth could slow. Confidence in the dollar or euro could grow. Both would cause a fall in the yen. But right now we have an historic opportunity for people with yen-based wealth to by investments in dollars or euros for massive discounts. Consult with a professional to find out how.