JPY growing despite low imports and exports



The Japanese yen has been trading with higher demand since the early session on Monday. In the Asian session today, the dollar/yen pair broke below the support level at 109.70 and rushed down the mark of 109.50. The Japanese currency aroused interest of bulls due to several reasons. First of all, investors are pleased with wider trade balance proficit for April. According to the Ministry of Finance, Japan recorded a trade surplus of 823.5 billion yen in April beating market consensus of a 521.5 billion yen proficit. Even the detailed analysis of the foreign trade report could not discourage traders to open long positions on the Japanese yen. Japan’s exports shrank by 10.1% in April from a year earlier, which is the fastest decline in three months. Imports contracted by 23.3% last month. Why do traders neglect dismal data on Japan’s imports and exports? Recently, Japan’s Finance Minister Taro Aso threatened to intervene in the forex market to halt unwanted appreciation of the yen. Amid falling stock indices, investors prefer to buy safe haven assets, in particular the Japanese currency. As a result, the overvalued Japanese yen has caused serious troubles in the economy. Besides, investors have doubts about the consumption tax hike to 10% from the current 8% that the Bank of Japan has planned for 2017. In response, the United States gave a warning to Tokyo against deliberate measures to weaken its currency ahead of the G7 summit. G7 finance leaders are due to discuss how to revive economic growth. Meanwhile, the yen bulls are certain that Japan’s Finance Ministry and the Bank of Japan will refrain from forex interventions.

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