Forex Dictionary Terms

Strong Yen

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Definition – What does Strong Yen mean?

Strong yen is a slang term for a period of time during which the Japanese yen trades at a higher than usual value relative to other currencies. A strong yen is seen as a disadvantage to Japan’s largely export driven economy. When the yen remains strong for an extended period of time, the Bank of Japan tries to weaken the currency through direct and indirect intervention.

ForexTerms explains Strong Yen

The term strong yen is very subjective. The level at which the yen is considered strong depends on who is making the call. Japanese exporters no doubt think the yen is too strong whenever it goes below 80 yen to the U.S. dollar, but the Bank of Japan seems to dislike the 70s. The major factors driving a strong yen aren’t usually economic fundamentals – Japan has a huge public debt, an aging population and a litany of other problems. Instead, the strong yen is often a result of Japan (and the yen’s) perceived stability when the rest of the world’s economies are in turmoil. In short, the strong yen is a result of the Japanese economy being predictable rather than strong.

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