By James McKee
The tsunami in Japan has been more trouble to Japan’s economy than it has been to the country’s infrastructure overall. The closing of factories and complete lack of confidence in the country’s economy has resulted in a massive sell off of Japanese assets and of the JPY. Current projections predict a massive decrease in Japan’s GDP both next quarter and the one after that, the current state of Japanese nuclear reactors will inevitably have an impact on whether or not the country’s economy can stabilize. There are efforts under way to bring down the temperature that is escalating in the reactors; and they include dumping massive amounts of water and cement on the affected areas.
To date Japanese financial markets have lost over half a trillion dollars and that number is increasing everyday. The value of the JPY has actually been increasing on the Forex market against the USD and other majors instead of dropping in value; this has driven down demand for Japanese products since they are only becoming more expensive. In Japan itself goods are flying off of store shelves in anticipation of an all out meltdown with regard to country’s infrastructure and local economy.
In the short term betting against the USD or the EUR would be a great idea with the JPY since it will continue to increase in value. There is no sign of the disaster in Japan calming down any time soon, indeed there are other aging nuclear power plants in the country that could see the same type of scenario. The Japanese Yen is going to be a wild card on the Forex currency exchange until Japan can solve its nuclear crisis and begin to address the problems therein. Such a crisis could occur in any country that does not properly maintain its nuclear power structure.
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