Japan’s yen has plummeted to a 40-year low. This is an unprecedented situation that will affect the major currencies from across the globe.
Even though the currency statement above is enough to grab attention, here’s a short value breakdown:
- USD/JPY: 161.3765
- EUR/JPY: 173.3685
- GBP/JPY: 204.3490
The reasons for this dramatic currency devaluation are closely related to the recent decisions the state has made. The GDP has been contracting more dramatically than the estimations in Q1 2024, intensifying economic impact. The BOJ (Bank of Japan) is feeling the pressure to re-think its loose monetary policies (near 0 interest rates, easing measures, etc.)
Also Read: BRICS Gold-Backed Currency to Launch at 2024 Summit?
Economic Impact on Japan & Global Trade
The fact that the yen is weakening isn’t such a big issue for Japan. It’s a double-edged sword for the country’s economy, with varied economic impact.
On the bright side, Japanese exporters are rubbing their hands happily as their products become more competitive internationally. But, (and it’s a big but) there will be consequences like:
- Import-dependent sectors are feeling the squeeze with rising costs
- Inflation is a real possibility with shaky economic stability
Are you following so far? Good! Because here’s where it gets really interesting…
Japanese investors are flocking to crypto to protect their savings from the currency’s freefall. The world’s crypto landscape might change as Japanese investors dive in. Japan’s established crypto rules could accelerate this shift, thus, adding another dimension to the economic impact.
We might see Bitcoin and Ethereum prices go through the roof – or crash hard. It’s like throwing a firecracker into the crypto pool. My research on this topic made me curious to see how the currency situation evolves.
Also Read: GCC: Gulf Nations Plan To Launch Common Currency & Ditch US Dollar
What’s Next? The Big Picture
The currency’s weakness could reshape global investment methods, which I found very interesting. ”What implications would this have”, you ask? What we know for sure is that it will affect emerging markets and international trade.
Investors will likely seek alternative methods to store their assets. This may result in a radical change in both traditional reserve currencies and digital assets.
Also Read: Russia Makes Major Announcement About BRICS Currency
Considering the yen’s weakness, we can expect some restructuring in how global investment flows. There will, of course, be consequences for emerging markets and trade dynamics.