Forex

Yen depreciates U.S. dollar as investors prepare for another volatile trading

Yen beats Dollar and Euro

The Japanese yen outperformed a much weaker U.s. dollar on early Monday. However, it finished below its lowest level in five months after a bounce in Wall Street stocks has pushed investors to go for safe-haven currencies like the yen.

It is already given that the yen benefits from stock market stress because the currency is supported by the current account surplus of Japan. This offers a more resilient currency of countries who are run by deficits.

The U.S. dollar eased about 0.1 percent against its Japanese counterpart at 108.70 yen. However, it managed to remain at its peak of 108.05 yen touched last Friday. This is the greenback’s weakest level since September 11 and it fell more than 1.3 percent versus the yen on the previous week.

The movement of the currency was also influenced by the released reports last week that suggested the government of Japan decides to nominate Haruhiko Kuroda as the governor of the Bank of Japan after the current one expires this coming April.

This also indicated that the loose monetary stimulus of BOJ will still be on its default level, which is perceived as a factor that might impact the yen by tempering its gains. The government of Prime Minister Shinzo Abe is the one to present the nomination of Kuroda to the parliament sooner this February.

The recovery of U.S. equities has also influenced the currency as the S&P 500 edged higher about 1.5 percent last Friday due to a burst of buying. Regardless of this, investors are still bracing themselves for another volatile trading.

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