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Japanese Yen, ETF Depreciates After G-20 OKs Aggressive Easing


With the Group of 20 overlooking Japan’s aggressive monetary policies amid grumblings of a currency war, the Japanese yen, along with related currency exchange traded fund, continues to depreciate.

CurrencyShares Japanese Yen Trust (FXY) was down 1.5% in afternoon trading Friday. The fund is down 11.8% year-to-date.

The G-20 block of countries were not opposed to Japan’s shift in monetary policies, as long as their goal was to beat deflation instead of weakening its currency to help domestic exporters, reports Wanfeng Zhou for Reuters.

“The Bank of Japan has been very aggressive about its monetary policy, and as long as inflation in Japan is at negative rates, their stance is going to continue to be justified,” Sireen Harajli, a currency strategist at Credit Agricole SA (ACA), said in a Bloomberg article. “There’s definitely more scope for aggressive monetary policy.”

The U.S. dollar has appreciated 1.5% against the yen, trading around $99.7 to the Japanese currency.

“Over the last week we have heard support for the BoJ aggressive policy from several fronts,” Camilla Sutton, chief currency strategist at Scotia Capital, said in the Reuters article.”Together this suggests that even with dollar/yen at 100, there is unlikely to be a global backlash; this in turn opens up the opportunity for dollar/yen to test higher still.”

The stimulative policies have also helped boost demand for Japan country-specific equity ETFs that hedge against a depreciating yen, such as the WisdomTree Japan Hedged Equity (DXJ) . [BOJ Bombshell: Yen ETF Plummets, Japan Stocks Soar]

CurrencyShares Japanese Yen Trust

For more information on the yen, visit our Japanese yen category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.