How will North Korea's threats influence the Yen? | Forex Factory

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How will North Korea's threats influence the Yen?

  • #1
  • First Post: Apr 9, 2013 9:12am Apr 9, 2013 9:12am
I would love to hear opinions about this subject, please read what I have copied from a news feeder

tensions again shot up Tuesday, April 9, with Pyongyang’s warning of a ballistic missile firing Wednesday, April 10 toward the Pacific and advice to foreigners in the South to evacuate: “We do not wish harm on foreigners in the South should there be a war,” said the statement.
Last week, foreign embassies were informed that North Korea would not guarantee the safety of their staffs after April 10.
Japan has deployed Patriot missile interceptors around its defense ministry headquarters in Tokyo and other key facilities including Okinawa, in the wake of North Korea’s move last week of two intermediate- missiles to its eastern coast, placing Japan, South Korea and the US bases at Guam within range.
  • #2
  • Apr 9, 2013 9:41am Apr 9, 2013 9:41am
Quoting N_na_nah
I would love to hear opinions about this subject, please read what I have copied from a news feeder tensions again shot up Tuesday, April 9, with Pyongyang’s warning of a ballistic missile firing Wednesday, April 10 toward the Pacific and advice to foreigners in the South to evacuate: “We do not wish harm on foreigners in the South should there be a war,” said the statement. Last week, foreign embassies were informed that North Korea would not guarantee the safety of their staffs after April 10. Japan has deployed Patriot missile...
The yen will rise. It is the Asian safe haven currency.
  • #3
  • Apr 9, 2013 9:45am Apr 9, 2013 9:45am
Hi Seneca pilot
Suppose a nuclear missile will be fired, then by simple logic, investors will look to short yen to have their money in a safer place.
  • #4
  • Apr 9, 2013 11:28pm Apr 9, 2013 11:28pm
Quoting Seneca pilot
The yen will rise. It is the Asian safe haven currency.
Yea.. more demand for the Yen in haven so it'll rise there.

Very basic macroeconomics here. If war happens, firms/companies will invest less in Japan and hence less demand of the Yen, hence it will fall.

(and yes I passed both macro-economics and micro-economics subjects back then in Melbourne Uni so you can trust me ).
back... and more dangerous.
  • #5
  • Apr 10, 2013 5:27am Apr 10, 2013 5:27am
What has been said in this thread might seem obvious, but I'm not convinced a war would have much effect on the yen at all.

First of all, Japan wont fight North Korea. If N. Korea goes to war it will be against S. Korea and the USA, they wont want to fight Japan too. South Koreans sure as hell don't want Japanese military on the peninsular. USA doesn't want Japan to go to war. China doesn't want Japan involved. And the Japanese don't want war. So its location is almost irrelevant, for all it matters it may as well be on the other side of the world.

The USA has much more military presence in the region than Japan does. USA also has much closer economic, military and cultural ties with South Korea than Japan does, so I think capital flight from Korea is much more likely to flee to USD than JPY.
si hoc legere scis nimium eruditionis habes
  • #6
  • Edited 5:10pm Apr 10, 2013 5:59am | Edited 5:10pm
Quoting numbnuts
What has been said in this thread might seem obvious, but I'm not convinced a war would have much effect on the yen at all. First of all, Japan wont fight North Korea. If N. Korea goes to war it will be against S. Korea and the USA, they wont want to fight Japan too. South Koreans sure as hell don't want Japanese military on the peninsular. USA doesn't want Japan to go to war. China doesn't want Japan involved. And the Japanese don't want war. So its location is almost irrelevant, for all it matters it may as well be on the other side of the world....

what you are saying is a good counter argument. but the problem is markets are moved by greed and fear. majority of investors are dumb creatures. the moment war breaks out they will assume japan is somehow tangled in it, and by virtue of fear and ignorance they will shun investments in japan, even though there is no logic for it. thats just the way it is. as a result, the yen should indeed fall.

if 80% of the people in the world started eating shit, you can bet sooner or later the other 20% will follow suit. thats the nature of people, they wanna stick with the majority and follow the herd even if the herd is walking into dangerous territory.
  • #7
  • Last Post: Apr 11, 2013 8:57am Apr 11, 2013 8:57am
How the Yen will react to the news depends on 1. Prior Yen movement leading up to the news 2. Market sentiment (technical positioning of the market) 3. Actual macro-economics that will affect the supply and demand of the yen. My 2 cents worth is that if missiles are fired, the immediate impact of the market will be to Buy USD and dump the Yen - USD being the safe haven in times of international tension and the YEN being geographically closest to Korea. However, due to the recent run up in usd/jpy after BOJ's QE, i think the market is very short and will use this as an excuse to buy back the yen - think Risk-off, unwinding of the yen carry trades, repatriation of yen funds etc.
In short, if i can catch the news real early, i buy usd/jpy and flip my position at the first sign of reversal. Haha that is just me!
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