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Australian Dollar to Japanese Yen
The Australian Dollar against the Japanese Yen is often one of the most highly correlated pairs to price action against US equities on a short to medium-term basis. When there is a risk-off approach and rise in a low risk trading environment, the AUDJPY pair tends to decline. This currency pair tells traders how many Australian Dollars are needed to buy one Japanese Yen. Due to the interest rate differential, carry trades work best when risk aversion is low and investors are willing to invest in high yielding (risk) currencies.
Australian Dollar (ISO code AUD)
- The Central Bank is the Reserve Bank of Australia.
- The AUD was introduced in February 1966 to replace the Australian Pound and is currently around the 5th most traded currency in the world, behind the US Dollar, the European EURO, Japanese Yen and UK’s Pound Sterling.
- AUD gives greater portfolio exposure to neighbouring Asian economies and has strong ties to China which affects performance of the Australian economy.
- Is known as the “Commodity Currency” because of natural resource exports of Coal, Iron Ore, Copper, Gold, Natural Gas, Uranium and Renewable Energy.
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.