Japan has one of the most profitable currencies on the Forex market. However, because of the economic decisions of the prime minister of the Japanese country. Traders and analysts were a little doubtful about the future of the Japanese currency. Now, the yen is increasing because of the resignation of Japanese Prime Minister Shinzo Abe.
For Forex market traders and analysts, it is important to be aware of political inflections and changes. Since the key of fundamental analysis is to focus on the changes that political decisions can cause in the performance of currencies.
And in this case, the resignation of the Japanese Prime Minister, Shinzo Abe, caused traders to increase their operations with the yen.
The resignation of the Japanese prime minister
The yen strengthened notably against the dollar. This after the news that Abe, Japan’s longest-serving prime minister, would resign due to his deteriorating health.
Abe decided to leave behind a legacy of stability and centralized power. Power that propelled powerful economic stimulus policies, known as the “Abenomics” project.
Abenomics is a comprehensive policy package to revive the Japanese economy from two decades of deflation, all while maintaining fiscal discipline.
It also improved relations with the United States during the Donald Trump administration, unleashing both powers to develop more economic agreements.
Concerns about a possible change from Abe’s expansive economic policy, Abenomics, fueled the move in the safe-haven currency, Reuters investors and analysts said.
“The strength of the yen is seen in a bit of uncertainty”said Lou Brien, a strategist at DRW Trading in Chicago. “Abenomics has been one of the most influential economic strategies.”
Japanese yen price to date
At the time of writing the Japanese yen is trading at $ 105.33 against the dollar. Thus, the dollar lost 1.1% against the yen for the last time.
Thus, the dollar returned to its fall against a basket of major currencies. This following the statements of the president of the Federal Reserve, Jerome Powell.
Powell said the US central bank will seek to keep inflation at 2%, on average. So periods of too low inflation are likely to be followed by an effort to raise inflation above 2% for some time.
Will the yen be able to maintain this streak when the new Japanese prime minister is elected?