HomeForexJapan's yen remains a secure investment choice, appreciated for its uniqueness and...

Japan’s yen remains a secure investment choice, appreciated for its uniqueness and reliability as a safe-haven asset.

Japan’s Yen Still Seen as Safe-Haven Asset Amid Middle East Conflict

Yen Remains a Safe-Haven Asset

Despite its recent weakness, the Japanese yen continues to be perceived as a safe-haven asset, much like the Swiss franc and U.S. dollar. This perception has been reinforced by the ongoing conflict in the Middle East, which has led to increased demand for safe-haven currencies. Masato Kanda, the vice finance minister for international affairs at Japan’s Ministry of Finance (MOF), emphasized that the yen is benefiting from this safe-haven demand.

Government Prepared to Take Action

Kanda also assured that the Japanese government is prepared to take necessary steps if excessive movements occur in the currency market. These steps may include raising interest rates or intervening in the market. He emphasized the government’s commitment to firmly address any challenges that may arise.

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Market Intervention and IMF Remarks

When asked about recent remarks by a deputy bureau chief of the International Monetary Fund (IMF) regarding Japan’s currency intervention, Kanda declined to comment. However, he emphasized that various factors determine currency rates, and long-term interest rates are just one of those factors.

Uncertainty Surrounding Middle East Conflict

Kanda acknowledged the fluid nature of the ongoing conflict between Israel and Palestinian militant group Hamas. He stated that it is difficult to predict the impact of the situation, including the potential effects of rising oil prices on Japan’s economy. Despite this uncertainty, Kanda highlighted that global funds are still flowing into safe-haven currencies such as the dollar, yen, Swiss franc, and pound.

Overall, the yen’s status as a safe-haven asset remains intact, bolstered by geopolitical tensions in the Middle East. The Japanese government stands ready to take action if needed, while also recognizing the complexity of currency rates and the potential impact of global events on the economy.

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