Considered a highly volatile foreign currency subject to wide swings, the Japanese yen (JPY) offers plenty of opportunities to capitalize on changing market conditions. As the third most traded currency in the foreign currency exchange market behind the U.S. dollar and the euro, the yen is also a vastly used reserve currency behind only the U.S. dollar, the euro, and pound sterling.
The strength of the Japanese economy, which is a major foreign source of financing of the U.S. national debt, also makes the yen currency a major indicator for the direction of other Asian currencies. With its high volatility causing short-term spikes, the value of the yen is based on various global economic conditions:

The Bank of Japan is charged with controlling inflation and managing growth through conservative fiscal policies.

Japan’s robust industrial output and advanced technology make it a hub for manufacturing electronics, automobiles and steel.

How the U.S. dollar reacts in international markets is also an indicator of how the yen’s performance will sway.

The yen tends to fluctuate based on global conditions with signs of weakness occurring during a strong global economy.

With the yen currency and U.S. dollar accounting for over 30% of the world’s gross domestic product (GDP) through trading goods and services, the yen’s value stands as a major international investment. The value and high volatility of the foreign currency make investing a risky endeavor for any trader.

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