- Wealth PMS (50L+)
The Japanese Yen has hit a seven-year low against the USD. This comes on the back of the surprising decision by the Bank of Japan to increase their QE stimulus on Friday.
The Yen is currently trading at 114.93 (November 06).
Rewind back to September 2011, when the Yen was at 75.63. Since then, the Yen has gradually weakened, picking up pace from September 2012 and is now at 114.93 to the dollar. That’s a near 52% devaluation in the space of 3 years.
Looking back a little further, the pictures tell a new story.
A long-term trend-line emerges. The trend since late 2008 onward, seems to echo the direction in which the exchange rate fluctuated during the 1990-1999 period.
If we observe the long-term trend line, we can see that the current rate seems to have broken the resistance-level (at about 112.03). Having broken that resistance, it could move in either 2 directions:
With the BoJ stimulus kicking in, and expectations of similar stimulus announcement by the ECB, it is an interesting period for the USD-JPY exchange rates. We shall wait and see how the next few days pan out.