AUD/JPY - Australian Dollar / Yen


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The AUD/JPY Currency Pair (Australian Dollar / Yen) is the exchange rate of Australian Dollar expressed in Yen. It expresses the value of one Australian Dollar in Yen.

The AUD/JPY represents less than 1% of total transactions on the FOREX in 2010. The pair AUD/JPY is deemed to be related to the evolution of gold prices. In fact, Australia is the 3rd largest gold producer in the world and as such, when gold prices decrease, the Australian dollar also decreases.

The Australian dollar has also a strong correlation with the New Zealand Dollar of 96% from 1998 to 2008 parity between the AUD/USD and the NZD/USD pair. This can be explained by the fact that Australia is a preferred business partner because of its proximity. If Australia is economically healthy, exports from New Zealand will increase and this will have a beneficial effect on economic growth.

The pair AUD/JPY has also been influenced for many years by the phenomenon of the carry trade. Indeed, for many years, interest rates were kept at 0% by the Bank of Japan. Australian rates controlled by the Australian central bank have been for many years much higher than Japanese rates. As a result, investors sold heavily the yen to buy Australian dollar which was more profitable.

However, with the crisis, the interest rate differential has narrowed considerably and the phenomenon of the carry trade is no more up to date on this pair. As a result, the yen has appreciated considerably due to the unwinding of carry trades. For a country based on exports such as Japan, this severely penalizes the country's growth.

The pair AUD/JPY is quoted in 2 decimal but you can sometimes find 3 with some brokers. The exchange rate is floating and therefore subject to the law of supply and demand on the interbank forex market. Its daily volatility in 2008 was about 200 pips.

Both central banks linked to the pair Australian Dollar / yen are the Central Bank of Australia for AUD and the Central Bank of Japan (BoJ) for the JPY. Like other central banks, the BoJ intervenes regularly directly on the foreign exchange market to control its currency. Thus, it is not uncommon to see significant upward and downward spikes on the pair reflecting an intervention by the BoJ to depreciate the yen in particular to make increase exports of the country.

The decisions taken by both central banks also have a strong impact on the evolution of the pair AUD/JPY (interest rate changes, asset buyback program ....)

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AUSTRALIAN DOLLAR (AUD):

The Australian Dollar (AUD) is the national currency of Australia. The Australian Dollar is the 5th most traded currency on Forex, behind the British Pound. The CAD is present in 7.60% of total transactions on Forex in 2010.

Its notoriety is largely due to the fact that Australia is the 3rd largest gold producer. The Australian dollar is strongly influenced and correlated with gold prices. In times of crisis, the AUD is therefore indirectly a safe investment because gold is regarded by investors as well. We note also that since 2008 the Australian dollar has appreciated considerably to break records to be above the parity at the same time as the price of gold which also broke records.

You can see below a 5 Australian Dollar banknote:

AUD Australian Dollar

The Australian Dollar is controlled by the Central Bank of Australia which is responsible for making monetary policy decisions.

 

YEN (JPY):

The Yen (JPY) is the national currency of Japan. The yen is the third most traded currency on the forex behind the U.S. Dollar and the Euro. The yen is present in 19% of transactions made on the Forex in 2010. This proportion is due to the fact that USD / JPY is the second most traded pair with 14% of total transactions in 2010. Japan remains a hub for the global economy. Japan's growth is mainly due to exports

It is for this reason that the government had adopted a zero interest rate monetary policy to depreciate the yen. This has been for a long time the case with the phenomenon that we know on the USD / JPY. The carry trade has ended with the crisis, significantly enhancing the value of the yen against the dollar and other currencies.

 You can see below a 10000 Yen banknote:
yen jpy

The Japanese currency is controlled by the Bank of Japan (BoJ), which is responsible for making monetary policy decisions.


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