How does the fact that the yen is considered a safe-haven currency have the potential to impact the Japanese economy?
TOPICS: Currency Appreciation, Safe Haven Currencies
SUMMARY: Due to the intensifying trade conflict between the U.S. and China, investors are seeking out the relative safety of the Japanese yen. Investors consider the yen a safe-haven currency, one that is likely to hold its value better than other assets when markets become volatile. As a result, the value of the yen appreciated against the U.S. dollar.
CLASSROOM APPLICATION: This article can be used to discuss the factors that influence currency fluctuations. The importance of safe-haven currencies can also be explored.
1. (Introductory) Why did the Japanese yen appreciate against the U.S. dollar?
2. (Introductory) What is a safe-haven currency?
3. (Advanced) How does the fact that the yen is considered a safe-haven currency have the potential to impact the Japanese economy?
4. (Advanced) How does currency appreciation impact a nation?