Rising Yen May Impact Global Economy

Linda Sharps

It seems counterintuitive given the horrific nature of what's happened in Japan in recent days, but there's been a record-breaking rise in the value of the Japanese yen. Despite the earthquake, tsunamis, potential for nuclear crisis, and massive damage to the economy, the yen has jumped more than 8 percent against the dollar this week.

There are several complicated factors driving yen strength, one of them being attributed to Japanese investors keeping their funds onshore at the moment instead of trading overseas, which creates a picture of capital surplus.

The rising yen is yet another threat to Japan's recovery, and a global issue as well. Japan is an export-based economy, and the high yen value impacts both Japan and the countries that source there. If trade slows as the result of the yen, economic pain in Japan could be felt worldwide.

For the first time since the sinking euro was rescued in 2000, global banks have banded together for a "currency intervention" to restrain the yen. Based on the news of this move, the yen fell against the dollar and the Japanese Nikkei 225 stock index rose.

It's a complex story with many moving parts, but you can stay on top of fluctuating global currency exchange rates with any number of free online tools:

USD value rates in a table
XE's Universal Currency Converter
Yahoo's converter
The x-rates calculator

Note, also, that you can use Google to look at exchange rates. Just type in something like "5 dollars in yen" and Google will tell you the converted value (407.9000 Japanese yen, as of this writing).

XE also has a free mobile converter app for iPhone and Android.

Japan is in dire need of catching a break, wouldn't you say? I can't pretend that I understand all the economics of this new development, but I hope we start hearing some good news for the Japanese people very soon.

What are your thoughts on the rising yen? Do you think this "intervention" to stabilize yen prices is a good move?

Image via XE Currency App

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