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INVSTR TOPIC: JAPAN

by | Feb 2, 2016

The Bank of Japan made headline news last week when it decided to adopt negative interest rates. invstr’s Lea Jakobiak looks at the reasons behind the surprise decision and impact on the japanese and worldwide economy.

 

Video Transcript

LEA JAKOBIAK (Reporter, invstr): The Bank of Japan made headline news last week when it  decided to adopt negative interest rate. But what’s all the fuss about?

KERIM DERHALLI (CEO, invstr):  It implies that the central bank is really worried about the level of activity in the economy and also the level of inflation. So Japan has been suffering really since the late 1980s with a very sluggish economy and deflation. That is to say that prices have been falling and they seem to making a really concerted effort to try nd boost activity and also to boost the level of inflation. It hasn’t been working and so they came up with this surprise decision on Friday to make interest rates negative that is to say that if banks hold excess reserves with the central bank they’ve actually got to pay the central bank for having their reserves with them.

LEA JAKOBIAK (Reporter, invstr):  But Japan is not the only countrie to have negative interest rates. The eurozone in Sweden does to.

KERIM DERHALLI (CEO, invstr):  rates in the US and the UK have also been at extremely low levels for a very long period of time now. And so the Japanese, what Japanese did, has become fairly accepted behavior.

LEA JAKOBIAK (Reporter, invstr):  So we know that the US economy and the Chinese economy matter to us in  the UK but Japan is actually the world’s third-largest economy. So it’s a big deal as well.

KERIM DERHALLI (CEO, invstr): So it is a very large exporter of goods and services to the rest of the world. The Japanese also like to say they’re probably one of the strongest saving nations in the world and a lot of the money that they save domestically gets exported to us and the rest of the world.

LEA JAKOBIAK (Reporter, invstr):  And going forward it looks like we can expect more from the Bank of Japan.  

KERIM DERHALLI (CEO, invstr): They’re importing oil and the price of oil has been falling as we all heard about a lot recently and so as the price of all fours that’s also been driving inflation in Japan lower. So they’re battling a lot of headwinds and they’ve realized that they need to be aggressive and as aggressive as they can be in terms of bringing rates rates down. So they could go further than they have already have. It’s a fairly modest move that they’ve made  It’s more symbolic than anything else but they could go further.

LEA JAKOBIAK (Reporter, invstr):  So investors will be following dollar yen closely off the back of this news and you can too on the invstr app. Here’s how.

MARK FAULKNER (Game Manager, invstr): So you want to find out more about the Japanese yen? Because, let’s face it Japan’s been in  the news a little bit. No problem at all. You go to the invstr app, go to the watch list, filter tab, currencies, scroll down to US dollar Japanese yen. Notice a price increase that took place. You can now buy far more yen for your dollar than you could  previously because the Bank of Japan has dropped interest rates to a negative setting.

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Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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