The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Foreign Exchange: Yen moves centre stage

Japanese currency becalmed despite bad news; Possible US move would prompt sell-off

Ostensibly, there appeared little excitement to whet the appetites of yen traders throughout May. The yen was locked in tight ranges against various other currencies, and, not surprisingly, implied volatility started to trend lower. One-month vol, which was being quoted at around 19% at the end of March, had eased off to below 14% near the end of May. Other currencies were clearly moving around to a greater extent. But even if the yen was becalmed there was enough news flow to suggest that activity could pick up.

At the time of writing, the yen had easily shrugged off a series of negative pieces of news. On May 18, the currency came under initial pressure after Moody’s downgraded Japan’s foreign-currency debt from Aaa to Aa2. However, in this era of relative devalue trading, the yen soon regained its poise. The fact that Moody’s also saw fit to upgrade Japan’s long-term local-currency debt to Aa2 from Aa3 left, in the words of Bank of Tokyo Mitsubishi UFJ, "many Japan watchers nonplussed... For JGB holders as a whole, this should be a positive development, given that net external debt only totals 12% of GDP." Perhaps importantly, Bank of Tokyo Mitsubishi UFJ highlighted the fact that Moody’s had made the "connection between Japan’s considerable savings surpluses, which have allowed the government to ensure smooth domestic absorption of new issues".

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree