Recent turmoil in the world's financial markets and concerns about a global recession have driven investors away from high-yielding currencies such as the euro and the pound. As a result, lower-yielding currencies like the dollar and the yen have surged in value because they are considered by many investors to be a safe-haven.
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Investors often borrow yen to fund investments in higher-yielding currencies. When those currencies weaken, and investors reverse their positions, they are forced to buy back the yen, raising its value.
A stronger yen can hurt Japanese companies that sell goods overseas when profits are translated back into yen.The dollar fell to ¥94.09 Monday from ¥94.63 late Friday. On Friday, the yen drove the dollar to a 13-year low of ¥91.10.
The recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability.
