Should You Invest In NZD/JPY?

1. Those looking to add more currency pairs to their portfolio can consider the NZDJPY as a viable option. It is a major currency pair that is part of the mainstream of online trading.

2. Day traders should also consider the Kiwi and Yen as a viable option. Small movements in currency value can provide plenty of profit opportunities for observant traders who track the markets throughout the day.

3. Traders who are searching for ways to hedge their bets and reduce risk by diversifying. Many traders focus heavily on the EUR/USD, and adding the option of the NZD/JPY has some substantial benefits.

The economies of the two currencies are closely linked to each other through culture and proximity. For years, the Japanese have made extensive efforts to modernise their economy and link themselves to the West. This ideology began prior to World War II, when the Japanese government believed that close ties with the West was the only solution if they wished to increase the standardliving for their people enjoyed. A new age of industry was introduced in 1868, which saw an extraordinary transformation in Japan, under the direction of the Emperor Meiji.

Despite its location, New Zealand is a Western country, due to its British Heritage. As a former British colony, New Zealand enjoys common law and similar accounting practices to the UK and other English and Western economies. This makes the Kiwis a prime trading target for the Japanese, as they have plenty of experience in trading with similar nations.

Japan is one of the biggest economies in the world. With a GDP of almost five trillion dollars, the country has enjoyed unprecedented success for many years. Despite a decline in prosperity in the last few decades, Japan remains a leader in automotive and electronic exports. Unlike Japan, New Zealand is a significantly smaller economy, with a GDP of just under 200 billion dollars. However, New Zealand can provide its citizens with an extremely high standard of living and over the last several years, has been considered by many to be the most successful economy in the world.

The total trade value of the two economies is 6.5 billion dollars annually. Both Japan and New Zealand are part of several economic partnerships and are currently working on a free trade agreement. Japan is a popular destination for New Zealand tourists and students.

This currency pair has experienced some fluctuations over the last decade. The Kiwi plummeted against the Yen in 2009, after the economic crisis, falling to a low of 45 Yen to a single NZD. By 2015, the New Zealand Dollar had fully recovered, reaching a high of 93 Yen. Over the last several years, the trend has reversed, with the JPY gaining ground steadily.

Several key reasons for fluctuations in the value of the currency pair includes balance of trade, government monetary and fiscal policy, interest rates of central banks and the possibility of a new free trade agreement to be signed in the future. Demographics can also influence value, with Japan suffering from a rapidly aging population, while New Zealand has a much younger population and higher levels of immigration.

1. Brexit could have considerable ramifications on both currencies. The British government has expressed interest in signing a free trade agreement with both countries after it leaves the European Union.

2. Many financial excerpts focus on the state of Japanese Banks. They consider them to be ‘’Zombie Banks’’. These are banks with limited capital, unable to provide funding for businesses and loans to individuals.

1. Trading with eToro is perhaps the best option available. It’s quick and can be done easily on any device with a connection to the internet. Trading online in this manner is also possibly the safest way to invest in currencies, as all funds are fully protected in leading European banks.

2. Go to your nearest currency exchange location. This is the ancient and not very useful method. Not to mention extremely unsafe if you wish to exchange large amounts of money.

3. A bank or other traditional ‘’brick and mortar’’ financial service provider. While these institutions are perfectly legitimate, they do not provide the leverage services of most online trading brokers.