BREAKING: Analysis: Japan's Yen Doubles Up as High Yielder and Safe Haven
TOKYO (Reuters) - Having burnished its traditional image as a global safe haven during the coronavirus pandemic, Japan’s yen is attracting fresh interest as the highest yielder among the three major currencies.
The past few weeks have seen the yen hit multi-month highs as news broke of a Biden presidency and a possible COVID-19 vaccine, which is at odds with its tendency to weaken when investors seek risk and growth prospects.
Analysts cite two big reasons driving a wave of money into yen markets. As a net creditor nation in a world of fiscal profligacy, the yen has retained some of its safe-haven credentials.
In addition, as interest rates in Europe and the United States plunge, Japanese government bonds (JGBs) offer comparatively higher returns, in particular, on an inflation-adjusted basis.
The change in the yen’s fortunes was brought about by the U.S. Federal Reserve’s sharp monetary easing, which wiped out returns in dollar-based assets.
Japanese investors lost their big appetite for overseas investments as domestic yields became higher than those available abroad.
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