An active forex dealer answers anything! Everyone's Q&A [Traders Securities Everyone's FX Iguchi Yoshio]
If you have no one to question and you don’t understand even after researching... If you have such worries, leave it to this project. Mr. Iguchi from Traders Securities will solve your questions for you!
Profile of Mr. Yoshio Iguchi
Iguchi, Yoshio. Trading Department, Market Division, Traders Securities. Certified Technical Analyst. He has been in the financial sector since 1998, mainly engaged in covered dealing operations centered on the commodity markets for precious metals and petroleum products. Since 2009 he has been with Minna no FX, conducting dealing operations focusing on USD/JPY and other major European currencies. He is proficient in forex analysis from a fundamental perspective and is also reputed for short-term predictions using technical analysis. Recently, he has appeared in Minna no FX’s free online seminars, delivering easy-to-understand lectures that have been well received. Additionally, on Twitter, professional dealers share real opinions about the markets, so be sure to check it out.
Twitter:https://twitter.com/yoshi_igu
※This article is a reproduction and editing of an article from FX攻略.com November 2018 issue. The market information written in the text may differ from the current market, so please note.
Q24. When U.S. long-term interest rates rise, which currencies are affected and how? Similarly, what happens when Japan’s long-term interest rates rise? (Akita Prefecture / male in his 30s)
A. When interest rates rise, the home currency tends to be bought. If U.S. rates rise, the dollar strengthens; if Japan’s rates rise, the yen strengthens. However, this does not always happen, so take this opportunity to think about interest rates.
Investment destinations attract money
To put it a bit bluntly, what determines the direction of the exchange rate is interest rates. If rates are low, that currency is sold; if rates are high, that currency is bought. This is because money always seeks the most advantageous investment. If Japan’s yen interest rate is低く (low) and the U.S. dollar rate is high, investors will reduce the proportion of yen assets and increase the proportion of U.S. dollar assets to seek higher returns. As a result, there is a movement to buy the higher-interest dollar, leading to a market perception of “yen depreciation, dollar appreciation.” This is the market’s fundamental thinking.
Now, let’s actually compare with the current economic situation and see how the exchange rate reacts to rising interest rates.
