Falling Yen a Forex Conspiracy

Is the falling Yen a Forex conspiracy or simply an effort by the new Japanese government to fix two decades of a stagnant economy? It has been two decades since a Japanese economy seemingly set to dominate the world collapsed. Real estate in downtown Tokyo sold for a million and half dollars a square meter and the valuation of the Japanese stock exchange beat that of the NYSE. Then the real estate and stock market bubbles burst and bad loans similar to those seen in the US real estate market collapse came to light. During the ensuing two decades Japan has striven to keep interest rates close to zero to avoid total deflation of their currency. The result has been a very strong currency but a weakened economy. Japan moved from the number two economy to number three as China moved up. Now China is pushing to extend its economic, political, and military influence throughout Asia, if not the world. The USA is still the dominant economic and military power in the world but North America and the EU, the other great Western power, are on shaky ground and dealing with the aftermath of the great recession. So, how is a falling Yen a Forex conspiracy in the shadow of these events?

Pivot to Asia and Containing China

The Cold War with Russia is over and despite ongoing differences of opinion there is little chance of a war in Eurasia between NATO and the remnants of the USSR. But, because of expanding Chinese influence the US is carrying out a military and diplomatic pivot to Asia. Long ago, in the Second World War, Japan occupied much of China. After its defeat in the war Japan demilitarized and added a note to its constitution making war illegal. However, the nation has been part of the democratic block of nations for years and is in forward position in the Pacific. What better nation to be able to stand up to Chinese influence would there be than an economically more prosperous and somewhat more militarized Japan? There has been little complaint from the G-7 ministers as the Yen has gone into free fall. Exports are up and new prosperity may be right around the corner. A more prosperous Japan will be in a better forward position to counteract Chinese influence than any US aircraft carrier.

Forex Conspiracy or Not

Forex conspiracy theory can get carried away at times as not all actions of the Forex market are driven by cabals hidden in the shadows. However, sometimes not all foreign and economic policy is spoken. Then, when you read between the lines, you see that actions or inaction by governments can lead to far reaching economic, political, and military consequences. The apparent inaction on the part of major trading partners of Japan in the face of a declining Yen can be seen in a broader light of world events. Is the falling Yen a Forex conspiracy? Look for news that is important to Forex trading as well as global issues and decide.

Beating the Forex Conspiracy

If you call the falling Yen a Forex conspiracy, how can you trade currencies and prosper? If you believe that policy makers in Tokyo and Washington are calling the shots, look at what they intend to accomplish and how manipulation of the currency markets will help. Then trade accordingly.