The US Dollar Or Japanese Yen: Which Currency Is Realistically Stronger?

Juhi Mirza
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The currency wars have become exceedingly fierce in the current multipolar narrative. While several leading currencies are looking forward to defeating the US dollar, others are merely gnawing at the USD to claim the coveted reserve currency status.

In such a dynamic currency setting, multiple currencies are vying for the top position. So, let’s explain how statistically strong the US dollar is when compared to the Japanese yen, a currency that has been hammered hard by global external forces as of late.

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Which Is Stronger? The US Dollar or Japanese Yen?

japanese yen usd us dollar currency

The hammering of the Japanese yen, with the news of the currency hitting new price lows against the US dollar, has spread like wildfire within the financial realm. The currency has depreciated more than 10% in the past six months as the gaps between Japanese and US federal rates continue to intensify, impacting the overall positioning of the yen against the USD.

The yen has also depreciated gravely against the renminbi or yuan, falling nearly 7.5% against the Chinese currency. The current currency dynamics are boldly favoring the US dollar, as recent NFP metrics portray a positive employment outlook for the USD to bank and scale on.

Per the recent nonfarm payroll data, the United States added nearly 292,000 jobs in May, exceeding anticipated employment expectations. Reacting positively to this development, the US dollar gained strength globally, amping up by 0.30% to trade at 105 at press time.

The United States Is Attracting A Large Influx of Foreign Investors

Per the recent metrics shared by the Kobeissi Letter, the foreign holdings of US securities will hit a record of $27 trillion in 2023. Since 2009, the nation has been investing in foreign investments and stakeholding, bolstering the US dollar’s prospects in its wake.

Moreover, foreign investor shares in the US equity market have also leveled up. The recent metrics project a sharp 17% rise in the said data, bringing nearly $78 trillion worth of funds into play.

“Foreign investors are piling into US markets. Foreign holdings of US securities will hit ~$27 trillion in 2023, near the all-time highs seen in 2021. Since 2009, foreign investments in US markets have skyrocketed by 180%. This comes after the S&P 500 gained 573% during this time, materially outperforming other markets such as the EU, Canada, and Japan.

Meanwhile, foreign investors’ share of the $78 trillion US equity market has risen to a stellar~17%.

Such positive price metrics are indicative of a strong US dollar leading the way, as opposed to the Japanese yen, which is currently struggling to find a suitable footing in the dynamic financial realm.

However, the efforts to bolster the yen against the USD have already been executed. The Bank of Japan had earlier hinted at a possible intervention to strengthen the weak yen to curb the Japanese currency’s deterioration in the long haul.