Japanese Yen continues rally due to safe haven status

08-17-2009 14:12

The Japanese Yen continues its rally against the most-traded currencies due to various global and internal events that increase the attractiveness of safe-haven currencies, striking mostly European currencies today. The demand for refuge currencies such as the Yen was also boosted by the Japanese GDP figures, which were below par.

Attractiveness Yen

This Monday, Japan released its gross domestic product numbers that demonstrated a 3.7 expansion in the second quarter. The GDP figures were disappointing and resulted in rising concerns that Asia may need more time to show an economic improvement, which controversially increased the attractiveness of the Japanese Yen in Forex markets.

Bank failures

Colonial Bancgroup Inc. ended its activities as they weren’t able to cope with the rising debts, while lending banks in Pittsburgh and Arizona had to follow this example. This year’s bank failures in the US amount to 77, which results in a negative atmosphere in trading markets. UK house prices continue a record decrease, affecting the Sterling negatively as it posted one of the largest losses against the Japanese Yen this Monday.

Safe-haven status

Analysts say that the demand for the Japanese Yen is rising strongly, which should provide traders’ portfolio’s safety. Even if economic activities start to improve, there still remain numerous consequences of the worldwide recession that will become manifest, increasing unemployment figures and the total of failures throughout the world, which will surely spur demand for the safe-haven Yen.