The Japanese yen’s safe-haven status may be in jeopardy as rising import costs continue to weigh on the country’s export sector and eat into its current account, analysts say.
“As Japan’s current account condition continues to deteriorate, the yen’s function as a safe-haven harbor may come into question,” said Boris Schlossberg, currency analyst at BK Asset Management.
A nation’s currency may obtain ‘safe-haven status’ if that country has a current account surplus, whereby exports exceed imports. As people abroad pay for these exports in the exporting country’s currency, greater demand for that currency leads it to appreciate.
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