For nearly a decade now, Japan’s Finance Minister, Jan Azumi has been warning that the yen’s escalation against the euro have happened rather too quickly. Europe has been battling to solve its debt crisis which has resulted in a 15 percent appreciation of the yen against the Euro during the last six months of 2011. This has continued into 2012 which has witnessed a further 2.4 percent yen increase.
Impact on Japan’s Economy
Unfortunately, it’s not just Europe that is suffering from the debt crisis. According to UBS foreign-currency strategist, Daisaku Ueno, it is negatively impacting Japan’s economy. He pointed out, “in
dollar/yen, companies are adjusting to yen strength. But as Japan exports more to the Eurozone than it imports from it, it is more difficult to adjust to euro weakness.”
However, this has not been affecting overseas investors. They are still purchasing Japan’s bonds which is thus elevating the appreciating pressure on the yen. As well, the currency was 2 percent stronger at the end of last week than the figure for October 31 – the most recent dollar/yen intervention.