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Japan's yen may lose status as safe-haven asset amid virus spread

25 Comments
By Tomoyuki Tachikawa

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excellent, Japan doesn't need to be treated as a safe haven currency it should be treated as the health of its economy, which currently is poor, even likely to be in recession during the next quarter. speculative traders can dump their money in the US or other currencies, If the Japanese yen wasn't treated as such it'd be likely at around 115~120 yen/$

3 ( +6 / -3 )

The tax increase is a blip that will pass. The impact from China of the inevitable economic turn down in part due to the Wuhan virus is of greater and longer term importance. Japan needs to review the wisdom of so much of its economic viability tied to one not very friendly customer. In the longer term whether Japan will continue to slide or not is dependant on much needed and long resisted economic reforms. But that, instead of being a market problem is unfortunately a political one.

2 ( +2 / -0 )

who want to buy fake printed money???

6 ( +8 / -2 )

As long as the exchange manipulation continues it won't make much of a difference. This yen rate to dollar of 108 to 111 is nothing to worry nor should it concern the white collar criminals either. The real world scenario is this, people will buy and spend on what they need. The old days of 140 to 170 or 220 are long long gone.

0 ( +2 / -2 )

The price of gold is now heading to 6000 Japanese a gram which suggests that confidence in the Japanese currency is weakening.

3 ( +5 / -2 )

And as of today Japanese hospital staff have still not received a briefing regarding the coronavirus!

Abe is completely lost...

3 ( +4 / -1 )

Who would be stupid enough to hold their funds in yen? For several years I have held my funds in Swiss Francs mainly and a part in Dollars. The yen is due for a mighty downward correction. Everybody should divest themselves of the poisoned yen while they still have the chance.

-2 ( +2 / -4 )

The yen won’t move much. Coronavirus is an international event that will be an equal_opportunity thrasher of currencies as it expands. There may be a lag as each new country is affected, but things will even out quickly.

3 ( +4 / -1 )

Who would be stupid enough to hold their funds in yen?

Me. It's long been one of the world's most stable currencies. That's not my opinion but a fact.

The coronavirus is a risk to japan, given its potential to harm Japan's economy and others in Asia. Once the virus is controlled, the yen should return back to where it was, roughly.

1 ( +3 / -2 )

@umbrella this article calling it a "safe heaven" literally made me laugh.

1 ( +2 / -1 )

The Tax increase was disastrous move. 10% Tax upon the sale of property ?!? The Real-Estate market is going to Tank shortly - Government support of Teleworking is just the start of a shift to make all those nice new Office blocks redundant. They should have reviewed the whole application of Taxation and take a more practical approach rather than the blanket slapdown of 8-10% across everything.

As for this Virus, the handling of it by the Japanese Government is what's really of concern - not for now.... But for the future - we've seen viruses come & go, Bird Flu, SARS, now Covid-19, what about the next nasty thing to come from, wherever... There currently appears to be no cohesive plan for dealing with such a situation, which means there's reduced confidence in the Government protecting its economy going forward, so yeah, why invest in Japan with a Long term view when you're going to see continued jolts such as this. Short-termism is now the thing - disinvest, then reinvest upon the pickup, and then dump again at the next sign of trouble.

4 ( +4 / -0 )

Japans economy and Japanese yens valuation has been widely known in finance industry to cliff off after Olympics anyway.

Ageing population

Dept to GDP ratio being at 250%

Wth trillions in dept

Car and electronics exports already being taken over by China and Korea

Missing on all the innovations in IT for last 3 decades

Unsustainable and almost close to zero interest rates

Its long time due

Corona virus and loss in tourism may be the straw that breaks the camels back

Meanwhile USD and Euro and their respective economics are facing their own unique challenges.

Not long before governments will give up the concept of having foreign currency as reserve currency and adopt to gold or cryptocurrency instead.

1 ( +2 / -1 )

I look forward to it hitting 120+ per $again

0 ( +1 / -1 )

America is exploiting the medical crisis

-1 ( +1 / -2 )

I look forward to it hitting 120+ per $again

Agree! Can this be timed to happen around the end of November? :)

-1 ( +1 / -2 )

Most entertaining, you can tell those posting with a modicum od economic/financial nouse an the rest!

2 ( +2 / -0 )

Yen doesn't deserve a safe asset status anyway because of the 250% public debt. How can the money printed by the government of the most indebted nation on earth be safe?

-1 ( +2 / -3 )

Yen doesn't deserve a safe asset status anyway because of the 250% public debt. 

What about Japan's status as the world's largest creditor nation? And the fact the domestic debt is held by Japanese institutions and people in a currency Japan has the sole authority to issue?

Certain JT posters have been making the "yen as funny money" argument for several years now, predicting a fall of 200 or 300. And they've always been wrong.

-2 ( +3 / -5 )

If the debt is 3 trillion, that means there are also 3 trillion in corresponding assets.

Domestic debt is irrelevant, foreign debt in foreign currency is a problem.

Japan owes money to itself, no problem.

0 ( +4 / -4 )

Japan has negligible foreign debt. The domestic debt is not a problem whatsoever - money can be printed any time it chooses to service the debt, or bonds issued. There is nothing wrong with having ANY amount of debt as long as its domestic and you have the means to pay it back.

Japans safe haven status is here to stay. Yen - Safer than gold. I'd encourage everyone to keep parking any money they have in JPY.

-1 ( +2 / -3 )

If the coronavirus turns into a severe global pandemic, it should not affect the Japanese yen any more or less than it affects the euro or dollar. Unless the die-off in Japan is much steeper than in America or Europe, or unless the virus managed to shut down global trade in a way that uniquely tanked the Japanese economy (and not also every other developed economy in the world), this article strikes me as a lot of fear-mongering and excuse-making.

The yen falling as a reserve currency is a perfectly reasonable result of rising consumption taxes, a graying and shrinking population, and a massive national debt. Lay blame where blame is due.

0 ( +0 / -0 )

take a more practical approach rather than the blanket slapdown of 8-10% across everything.

well they did bring in a bunch of rules for favoured goods, and that was ultimately slammed as a disaster.

Simple rules for all products IS practical, complicated multi-rate systems aren’t!

1 ( +1 / -0 )

What about Japan's status as the world's largest creditor nation?

I’m one of the creditors, and won’t be doing special favors to the finance ministry in their time of need.

And the fact the domestic debt is held by Japanese institutions and people in a currency Japan has the sole authority to issue?

Being able to issue funny money doesn’t make me have any special faith in it.

Certain JT posters have been making the "yen as funny money" argument for several years now, predicting a fall of 200 or 300. And they've always been wrong.

“Always” only applies in the past, until it doesn’t one day. The yen has risks, like a lot of things.

2 ( +2 / -0 )

Being able to issue funny money doesn’t make me have any special faith in it.

If it were "funny money," Japan would have defaulted ages ago and/or suffered runaway inflation. Can you explain why it hasn't even come close to doing so?

-2 ( +0 / -2 )

Japan would have defaulted ages ago and/or suffered runaway inflation.

On what grounds do you claim that it should have already defaulted, were it to happen at all? Why can it not be a risk that may happen in the future, too?

Bad stuff does sometimes happen in the future!

1 ( +1 / -0 )

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