Overview, Knowing the Japanese Yen, Factors affecting Yen

Factors affecting the Japanese economy and the Yen

>The Gross Domestic Product (GDP): This indicates the net production and consumption of goods and services inside Japan. The GDP is the primary indicator of the health of the Japanese economy and the JPY, and heavily weights on its exports.

> Index of Industrial Production: Being an economy which is heavily dependent on Manufacturing, this index indicates the Output of Japanese Manufacturing, Mining & Utility companies which is found to have significant impact on the Net Output.

>Unemployment Rate: The unemployment rate reflects the overall economic health of Japan and is released every month by the Management & Coordination Agency. A drop in the Unemployment rate is seen as a positive development by the FX markets.

> Trade Surplus: Japan's inherent strength lies in its Manufacturing sector, which imports Raw Materials and converts them into Finished Products. The country relies heavily on Exports for the survival of its economy and a positive difference between its exports and imports (called Trade Surplus) is a necessity rather than a plus point. Forex markets react very positively to Trade Surplus in Japan and it strengthens the Yen.

> The Tankan Survey: This is an economic survey of more than 9000 small, large, medium-sized & Principal Japanese Business enterprises with regard to short-term business climate in Japan. A positive sentiment expressed by the participants of the survey is seen as a big positive for the Japanese economy and the Yen by Forex market participants.

> Global Oil Prices: Japan heavily depends on Oil imports. An increasing in Global oil prices will have an adverse impact on the Japanese exports because the cost of production would go up. This will make Japanese products more expensive for Foreign countries. Such trends impact the Japanese economy & JPY in a negative manner.

> The Effect of Chinese Yuan: As in the case of Japan, the Chinese currency Yuan is also undervalued to protect its exports. Basically, there is a stiff competition between Japanese products and Chinese products both in the US, Chinese and Japanese markets. If the Yuan appreciates against the US$, it would effectively make the Japanese exports relatively less expensive, and is likely to stir exports. This is seen as a positive development by the FX markets for the JPY and the Japanese economy.

Overview, Knowing the Japanese Yen, Factors affecting Yen