JPY/USD Futures

The Japanese Yen (JPY), the official currency of Japan, is the strongest and by far the most traded currency in the Asian market. According to the Bank of International Settlement (BIS) survey carried out in 2013, the JPY is the most traded currency after the US Dollar and Euro.

The composition of the world foreign exchange market

Source: Bank for International Settlements (April 2013)

On the 11th of March 2011, Japan was struck by a devastating earthquake resulting in a 10 metre high tsunami. The wave caused massive damage in coastal areas and particularly to the nuclear power plant in Fukushima. The aftermath of the natural calamity paralysed an already fragile Japanese economy. The yen rose to a post-World War II high versus the dollar as risk of radiation leaks from the crippled nuclear plant in Japan added to speculation that insurers and investors will redeem overseas assets to pay for damages. The yen strengthened considerably against the US dollar and stood at ¥76.36 on March 17, 2011.

The Japanese’s economy is currently the third largest in the world and it is mainly orientated towards industrial production and export. Japan’s primary export goods include computers, cars and electronic devices. The major trade partners are US and China, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany. The economic situation of its main commercial partner, the US, tends to have a direct influence on the JPY.