The USD/JPY exchange rate indicates how many Japanese Yen (JPY) are required to buy one US Dollar (USD) and is widely followed as a measure of risk sentiment in global markets. It is heavily influenced by the Bank of Japan (BoJ) and the Federal Reserve (Fed). Japan historically maintains ultra-low or negative interest rates, making the Yen a popular funding currency for carry trades. During market uncertainty, investors often buy Yen as a safe-haven asset, leading to Yen appreciation. At the same time, a strong US economy or rising Fed interest rates typically push USD/JPY higher.
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USDJPY FAQs – Your Questions Answered
Why is the Yen a safe-haven currency?
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Japan's strong external balance, political stability, and low inflation make the Yen attractive during periods of market stress, often pushing USD/JPY lower in risk-off conditions.
What is a carry trade and its effect on USD/JPY?
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Carry trades involve borrowing low-yielding Yen to invest in higher-yielding assets. A strong risk appetite supports the USD/JPY, while risk aversion triggers sharp declines as trades unwind.
How does the Bank of Japan's policy differ from other central banks?
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The BoJ has maintained an ultra-loose policy for decades, keeping rates near zero and intervening when currency moves become extreme. This often weakens the Yen relative to peers.
What are TMGM's USD/JPY swap rates?
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Swap rates apply after 23:59 GMT+2 and reflect interest rate differentials. Rates vary and can be checked on TMGM's platform or via the Trading Calculator. Swap-free accounts are available.
What is USD/JPY's typical daily range?
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Under normal conditions, the USD/JPY moves 50–70 pips daily, with larger swings occurring during Fed or BoJ announcements or periods of market stress.