Is The Yen In Trouble?
The yen is undoubtedly one of the world’s foremost currencies. But that does not mean it is getting an easy ride as the effects of the global recession go on. Even though the recession is said to be abating slightly, it is far from being over and the yen is feeling the pinch at the moment for sure.
This can be seen against a variety of currencies, as you would see if you used your currency converter to convert the latest exchange rates. But for the purposes of this article we shall go back a few weeks, so you can see how the yen is performing now.
One of the latest news stories about the weakness of the Japanese yen can be read at the Bloomberg website, at this link. Dated 10th June, it fits right in at the end of our look at the markets in this article.
Let’s look at the yen’s performance against the US dollar for the purposes of this article. Back on the 12th May the US dollar was bagging 97.127 Japanese yen. But this reasonable start to our report will soon change as you are about to see. The following day the exchange rate had gone down to 96.087, showing that the yen did have some fight in it at that point at least.
And it wasn’t to be a short term improvement either. The following day the US dollar dropped further to 95.413, as the yen turned on the pressure. The dollar ended the week against the yen at 95.184.
So what would happen next? At that moment in time the yen didn’t look to have many problems; indeed the yen seemed to be in the driving seat. A jump up to 95.805 by the dollar on the first day of the following week looked good, but that was to be the best that things would get to. An up and down week would turn into one that went in favor of the yen, as we finished on 94.052.
But it wouldn’t continue in that vein – not for long anyway.
The US dollar really started to push back the following week. On the 25th the exchange rate stood at 95.089, and it had some real peaks and troughs for the remainder of that week. The following day saw it standing at 94.952, but just two days later it was at 96.983. It fell back slightly to finish the week on 95.914, but that wasn’t too much of a problem as there was a lot more to come.
It seemed as if the yen was hanging on nicely at this point. But unfortunately for the Japanese currency the worst was yet to come. June would prove to be a trickier month than May had been, and although June started with a final exchange rate on the 1st of 94.859, things changed rapidly.
The exchange rate for the US dollar climbed steadily throughout that first week of June. By the end of the week the dollar was claiming 96.973 Japanese yen, which led us to believe that the yen was indeed starting to struggle.
But if we weren’t too worried even at that point, there was worse to come. In the last complete week that we have exchange rates for at the time of writing, things changed rapidly to leave us with a weakened yen and a strengthened US dollar.
As the week beginning the 8th June got underway, the exchange rate kicked off the week at an impressive 98.463. Impressive for the dollar that is, but not for the yen. That was the best point of that week as it turned out, but even though the yen did find the strength to fight back slightly it wasn’t enough to get back to the figures we had been looking at previously.
That week came to an end with a closing exchange rate of 98.221, which is a long way from the figures in the region of 94.0 that we had seen earlier on. So is this bad news for the yen? Clearly it is on a short term basis at least, but if we came back and reviewed the situation next month, what would we see? Would we see a better situation where the yen has picked back up again?
It remains to be seen whether the US dollar will be on top again next time around. But for the short term at least, there is a lot of work for the yen to do.
