Trimming a fifth weekly advance in the regional benchmark, Asian stocks fell this Monday. However, the Japanese currency strengthened against the USD and other major currencies. The outcome is attributed to several factors that may inter alia include monetary policy reviews from the U.S. to Europe, decline of metals and natural gas, yen getting stronger, which discourages Japanese exporters.
Yen Strengthens Its Position
Whereas Asian stocks nosedived, the Japanese national currency yen strengthened its position as it climbed 0.2 percent against the USD. It is the strongest value since the June 26. In fact, it received the highest appreciation in value among the 16 major currencies.
The recent reports claim that the Japanese yen strengthened as traders purchased safe-haven assets on caution about the slowdown in China. A major worry among these traders who are rallying behind the yen is the data that showed that Chinese industrial profit growth slowed in June; they are apprehensive that this may continue further.
China experienced a significant slowdown on its business revenue. Data from the National Bureau of Statistics showed over the weekend that China experienced much slower growth in business revenue that lowered the confidence of traders, indirectly benefiting the yen. However, combined industrial profits increased 6.3 which are slower than what it received in May.
The yen recorded a 2-week high of 129.75 against the euro where it was quoted at 130.44, last Friday. Forex experts opine that the yen may face resistance at this point. The Japanese national currency also approached 95.11 against the Canadian dollar; this happened for the first time after 11th of July this year.
Also, the yen did well against Swiss Franc as it reached to 105.27, which is the highest in the last two weeks. Similarly, the Japanese national currency also increased its value against New Zealand’s dollar where it racked in a weekly high of 78.98 which was 80.42 in the last week. The currency also did well against the Australian dollar where it closed at 90.51.
Yen’s Strength is Exporters’ Loss
However, the strengthening Yen has adverse effects on the exporters of the country; this is visible as on Monday, as most Asian stocks retreated. Japanese equities skidded thanks to the strong yen, which drags back Japan’s exporters.
The retreat is also attributed to the economic worries regarding the Chinese economy. Recently, the government ordered National Audit Office to conduct an urgent review of overall public debt which showed the wrong signal to investors.
To learn more about the reporter of this story: Jonathan Millet at firstname.lastname@example.org