The Japanese Yen

Japanese Yen has been experiencing a lot of downward pressure due to the central banks insistence on an inflationary slant to the economy. Let's face it Japan has been experiencing quite the troubled times for the past decade if not more, this has been one long recession for Japan. In order to combat this then the clearest choice for the leaders was to expand the export market and the quickest way to do that was to devalue the currency. But is it possible that this trend could end soon? Sure it is possible, but how likely is that going to be? Well for many traders it may be very soon, but you have to look at the fundamentals of the economy before jumping to that conclusion. The fundamentals, at the moment, do not necessarily point to a jump in the Yen as the domestic economy is not as strong as the leaders of Japan may want. Stimulus spending is a dubious way to increase the economy. Without the major jobs, the government provides the economy would slink down into the muck and go into a deeper recession. Clearly a business friendly environment should establish in order to really get domestic spending to increase. The simple fact of the matter is though you would need to counteract the Japanese tendency to save a lot of their money. Without the domestic population fueling the growth, the Yen can further depreciate against other currencies. While the economy is mostly based upon the export market that is just unsustainable for future long term, at least if you are going to solely depend on it. A change in market psychology is going to take time to take hold, there would need to be some shift in the younger population to buy more products instead of just saving. Is this possible? Sure it is, but Japan is certainly a unique country. Unlike many other western countries being unique is not necessarily a good thing in Japan. Rather, going with everyone else and being part of the larger social group is what many in Japan strive for. This feeling of wanting to be united can also be a great way for Japan to help recover their own domestic market. The key indicators to look for would be the savings rate, the growth rate of domestic companies, and the easing of any monetary policy by the central bank. These are not easily tracked as you would not seem them on a bar chart or any other chart in the financial times. Being aware of what to look out for can be an advantage if you want to make a move with the currency in relation to the United States Dollar for instance. Can the Japanese Yen make a rebound against the dollar? Many have said that this may be possible, but the indicators simply do not seem to be pointing that way when you look at the fundamentals. Of course, there are going to be those who look at the charts and say that this is a wrong conclusion, but clearly any chart has to be based upon the underlying economy, and that is just not at a point where it is strong enough to sustain a stronger Yen.