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Euro to Japanese Yen
As the Japanese Yen is a low-yielding currency, this makes an attractive vehicle to fund carry trades as traders borrow cheaply in JPY to buy higher-yielding currencies including EUR. During times of global optimism, performance and stability, investors favour carry trades and ignore in times of market stress therefore making EURJPY susceptible to swings in broad-based market sentiment trends. This currency pair tells traders how many Japanese Yen are needed to buy one unit of Euro.
Euro (ISO code EUR)
- The Central Bank of Europe is the European Central Bank (ECB).
- Currently 19 member states of the European Union (EU) use the Euro currency, meaning that exchange rate risk is reduced and contributes to economic stability for all countries within the EU.
- The Euro is the second-largest currency that is traded worldwide and is a major global reserve currency.
- The Euro replaced the European Currency Unit (ECU) in 1999 and strict rules were issued to member state countries joining the currency union.
Japanese Yen (ISO code JPY)
- The Bank of Japan is the Central Bank.
- Japan is a world-leader in technology manufacturing, especially the production of motor vehicles, electronic equipment to name just a few and are a member of the G7.
- The Bank of Japan keeps interest rates at virtually zero, therefore making the JPY 'carry-trade' attractive to other high-yielding currencies
- Japanese economy is a free-market & highly developed and third largest in the world by nominal GDP and fourth largest by the Purchasing Power Parity (PPP) due to the innovative nature of their economy.
- Faces increased competition from China and South Korea and carries the highest ratio of national debt to GDP of any developed nation due to low growth rate and aging population and social welfare costs. Japan also faces a declining population issue as cost of living is high.