The Yen loses battle against its safe-haven title

As one of the most traded currencies, this has indeed surprised markets adding to market fears, as the currency gets stripped away from its safe-haven title.

 The yen shed 7% this year against the dollar, showcasing its worst performance from the start of the year. With traders shorting against the Japanese currency and moving towards higher-yielding currencies elsewhere, causing it to tumble to its weakest level in 6 years.

Aggressive rate hikes and a completely dovish BOJ that will reportedly start to buy unlimited 10-year government bonds to curb yields from rising further, has pushed the yen lower against the USD falling 2.4% overnight to 125.10. Heading towards its lowest level since August 2015. Adding to that, Bank of Japan governor Haruhiko Kuroda still believes that a weaker yen is positive for Japan’s economy thus sticking to the policy of easing measures indefinitely.

Other factors affecting the yen’s strength more or less have affected other global assets such as rising oil prices, mounting inflation, and the war in Ukraine. But especially Japan as it faces its largest trade deficit in 8 years.

On the other hand, Japanese equities were driven higher benefiting from the weaker currency, leading gains in the Asian session this morning with Topix rising 1.3%.

A battered yen does amplify concerns over market growth and stock buoyancy that’s why it takes a large sum of the market focus right now.