By James McKee
China has just announced a severe decrease in the amount of precious metals they will export to Japan and the western world. This spells out trouble for manufacturing of everything from wind power turbines to iPods. Many manufacturers are already attempting to cut down the amount of precious metals in their products as the price of these substances increase. As these materials increase in price the cost of those products will also of course increase as time goes on. This spells out trouble for the GDP of economies who predominantly sell goods involving these metals. Such countries include Japan (producers) and the United States (distributors) and their currencies are in trouble as time goes on.
The Japanese Yen is of course best kept at lower values for the nation of Japan since Japan is chiefly an export country and does not want its goods to become to expensive to purchase. Perhaps in the short term a lack of exporting will help the Japanese Yen to fall in value however in the long term more quantitative easing is almost guaranteed in that nation if no money is coming from exports. To say the Japanese Yen is in trouble is an understatement.
With lessened purchasing power the nation of Japan will be less and less able to purchase anything from China or anyone else. If Japan fails the United States dollar will suffer heavily in the Forex currency exchange since American companies distribute the Japanese goods in America. This type of domino effect outlines the true nature of the global economy we currently find ourselves in. Pairing the Japanese Yen would be a bad idea since both currencies are likely to fall drastically in the near future, instead pair the Japanese Yen with a currency such as the Australian Dollar which has been rising steadily as of late.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
