How does the fact that the yen is considered a safe-haven currency have the potential to impact the Japanese economy?

Safe-haven currency

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.

QUESTIONS: 

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?

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