Japanese yen (JPY)
The Japanese yen is the official currency of Japan and the third most traded globally, accounting for a daily average volume of US$554 billion.1 It is also the third biggest reserve currency – estimated to make up around 4.9% of global currency reserves.3 It is issued by the Bank of Japan (BoJ).
The yen’s value is highly dependent on the strength of Japan’s economy, particularly its manufacturing sector which is responsible for key exports including vehicles, electronics, machine tools, ships and textiles. As the value of the yen often increases in line with demand for these products, many forex traders pay attention to economic releases. These can include the BoJ meeting announcement, GDP data, the index of industrial production, the Tankan survey, and unemployment numbers.
The strength of the Chinese renminbi can also have an effect as China is a key competitor in manufactured goods. A weak renminbi can make China’s exports more competitive internationally, reducing demand for Japanese products and, in turn, the yen. Finally, it is worth noting that the cost of oil can play an important role in determining the yen’s value. This is because Japan is a major importer of oil and high prices can weigh heavily on its economy.
