How to trade in the Japanese Yen (JPY)?

Do you want to invest in the Japanese Yen (JPY)? Then you’ve come to the right page! Here, I’ll discuss how and where you can invest in the Japanese currency.

How can you actively invest in the Japanese Yen?

You can invest in the Japanese Yen through a Forex broker. You’re always speculating on the price movements of the Japanese Yen in relation to another currency.

For example, you can trade in the currency pair EUR/JPY. This pair indicates how many Japanese Yen you need to pay to buy one Euro. When the EUR/JPY rate is 120, you need to pay 120 Japanese Yen to buy one Euro.

You can then speculate on price increases or decreases of the Japanese Yen in relation to the base currency:

• With a long position, you speculate on a rising price of the Japanese Yen.
• With a short position, you speculate on a declining price of the Japanese Yen.

You can invest in the Japanese Yen and other foreign currencies through a Forex broker. In the overview below, you can see which parties you can get started with:

Other options for investing in the Japanese Yen

With an ETF

An ETF is a security with which you can track a basket of stocks or other securities, you can read how this works in this article.

There are ETFs that specifically track the price movements of the Japanese Yen. An example of this is the Invesco Currency Shares Japanese Yen Trust (FXY) with a cost percentage of 0.4%. Of course, you can also choose to buy Japanese Yen yourself if you want to invest in this currency for the long term.

Stocks

You can also invest in the Japanese Yen by buying Japanese stocks. Japanese shares are listed in Japanese Yen, which means the value of the currency has a major influence on the price movements.

However, when you buy stocks, you also need to pay attention to other factors. The performance of the company plays a more important role in the results that are ultimately achieved.

Futures

It’s also possible to invest in the price movements of the Japanese Yen with futures. A future obliges you to take a certain amount of Japanese Yen at a fixed price at the end of the term.

Futures are widely used by companies to limit currency risks. Due to the high risk, futures are often not attractive to individual investors.

What are well-known Japanese Yen pairs?

You can choose from different currency pairs in which the value of the Japanese Yen is expressed. Examples include:

• EUR/JPY
• USD/JPY
• GBP/JPY
• AUD/JPY

What factors influence the Japanese Yen exchange rate?

• The policy of the Bank of Japan (interest rates!)
• The social and economic situation in the country
• Geopolitical factors

The Japanese Yen: a safe haven?

Many investors see the Japanese Yen as a safe haven. This is partly because Japanese politics have been very stable for many years. If you invest in the Japanese Yen, you generally don’t have to worry about your investment being ruined by political uncertainty in the country. With many other countries, you do have this risk.

Because the Japanese Yen is seen as a safe haven, this investment is mainly interesting in economically uncertain times. When other investment products perform poorly, investors look for safe havens. In such times, investing in the Japanese Yen becomes more interesting.

Of course, there are also investors who always trade in this safe haven, not just during economically uncertain times. These investors use their investment in the Japanese Yen, for example, to diversify their investments well.

Is the Japanese Yen still a safe haven in 2022 and 2023?

In 2022 and 2023, the reputation of the Japanese Yen as a safe haven no longer seems to apply: the currency has declined in value.

This is mainly due to Japan’s fiscal policy: unlike in America and Europe, the countries have not raised interest rates.

The exchange rate of the Japanese Yen is determined by the interplay of supply and demand. With low interest rates, the currency generates lower returns, leading to lower demand.

Tip: Practice with a demo account first

With most online brokers, it’s possible to create a demo account. With a demo account, you can practice investing for free without investing real money. If you’ve never invested in foreign currency or if you’re trading in the Japanese Yen for the first time, I recommend creating a demo account first.

By first investing with a demo account, you can practice investing. If your free investments with fake money go well, you can take the step to real investing.

If you want to learn in more detail how to predict the exchange rate of the Japanese Yen and other currencies, read the technical analysis course!