USD/JPY – a currency pair representing US dollar, expressed in Japanese yen.
The pair belongs to major currencies – major to currency pairs expressed by comparison the exchange rate of the national currency with the US dollar. The currency is accepted as the main one if there is a high demand on the international interbank market and a large trading volume.
Features of the Japanese economy and currency
The yen is the national currency of Japan, the fourth most important in the international rating of mutual settlements, is part of the Reserve currencies accounted for in the gold and foreign exchange reserves of countries by the International Monetary Fund.
The symbolic designation of the currency is the ¥ sign.
The issuer and regulator of the currency is the Bank of Japan, established in 1882. This is an independent structure with the status of a joint-stock company with an equity participation of the Government-55% and private capital-45%, performing, in addition to the supervisory function, conducting monetary policy in the interests of the state (international currency speculation, monetary issues, control and regulation of the discount interest rate and mandatory reserve rates, etc.).
Impact of monetary policy
The interest rate of the Bank of Japan directly affects the exchange rate of the Japanese currency. Simple rumors on the eve of the bank's meeting devoted to the decision on the amount of the interest rate are enough to the volatility of the currency pair has increased significantly, not to mention its guaranteed reaction to the decision made by the bank itself.
The time and date of the bank's meetings are known in advance. This is usually January and the last two months of each quarter. The duration of such meetings is two days, on the second day, the bid value is announced in the time interval from 3 to 5 hours GMT.
Since the beginning of the 2000s, the Land of the Rising Sun, with the rare exception of a few years, has been in a period of zero rates. The Bank of Japan's determination to "go down to the negative zone" in this matter and the current exchange rate of the pair show unjustified efforts.
The size of the interest rates of the two financial regulators of the countries whose currencies are contained in the pair directly depends on the size of swap (deductions or accruals of interest on the deposit of a trader who has an open transaction for more than a day). This data is presented on the Broker's website in the contract specifications section.
The peculiarity of the Japanese yen paired with the US dollar is that currency speculators give them Forex the unspoken status of a "safety asset". When there is uncertainty in the field of politics or the economy, the yen is in high demand among investors.
The influence on the foreign exchange market of the opening moment and the time of trading on national exchanges allows you to actively trade the pair at night (for Europeans), when other major currencies (except for the Asia-Pacific region) are inactive. Due to the geographical location, the pair can start working out the main national economic news from 1-00 GMT.
The dimension of the pair for a long time was three digits before the comma, after it two or three digits, depending on the accuracy Broker's quotes (120, 38(5)). Recently, the trend of strengthening the national currency of Japan has been leading quotes to double-digit values.