Why Is the Japanese Yen a Safe-Haven Currency?

by Matthew Kerkhoff
Financial Sense

During times of uncertainty, such as the prelude to the Brexit vote, investors tend to gravitate toward the Japanese yen. This causes the yen to appreciate and has led to the common perception of the yen as a safe-haven currency.

This strengthening of the Japanese currency during periods of risk aversion has become so repetitive and ingrained that it is rarely questioned. But why is it that global investors flock to the currency of the world’s most indebted nation whenever trouble arises?

The yen’s role as a safe-haven currency has been well documented. Aside from the many white papers and research studies demonstrating that conclusion, a quick review of recent events shows this to be the case.

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