Investment Idea

Are we there yen?

Carlsquare

20 Oct 2022 | 2 min read

Contents

United States dollar vs Japanese Yen Spot (USD/JPY), daily one-year price chart United States dollar vs Japanese Yen Spot (USD/JPY), weekly five-year share price chart The full name for abbreviations used in the previous text:

It has been over 20 years since the Japanese Yen reached the same lowly levels where it is at currently. Hovering just under 150 ¥ per $US on Monday, the currency is as weak as it was in 1998 when the bank of Japan intervened.

The currency has lost more than 20 % of its value YTD, something that in turn has sparked the interest of many investors looking for assets at a discount. With large private equity companies such as KKR, Blackstone and CVC increasing their investments in the country, there is no denying that the loose fiscal policies and overall financial environment in Japan is enticing for investments.

Japan has always been a big exporter in some areas, e.g., electronic devices, and a big importer in other areas, e.g., oil. With the current weak yen both importers and pensioners are suffering as prices rise with the overheated economies of the world. While all the other nations are tightening their policies in order to try and stem the flow of rampant inflation, Japan sticks out. Being the only one left doing something others have stopped doing begs the question: are you brave or naïve?

Due to the release of the consumer price data on Friday 21 October and with a government that has seen better days in terms of approval, it is likely an intervention just might be around the corner. This intervention could turn the tide and stop Japan from being the fiscal equivalent of the odd-one-out.

United States dollar vs Japanese Yen Spot (USD/JPY), daily one-year price chart

Source: Infront and Carlsquare. Note: Past performance is not a reliable indicator of future results

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United States dollar vs Japanese Yen Spot (USD/JPY), weekly five-year share price chart

The full name for abbreviations used in the previous text:

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence

Risks

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