Figure 1 Image source- Live Trading News
Currency prices have undoubtedly been affected by the coronavirus pandemic that has become a global menace and but the Japanese Yen has remained strong since it is a haven currency.
There is a likelihood that the Yen might see some more upside if the U.S attempts to make an early economic restart before the coronavirus threat dies down. The U.S has been affected by the situation, just like many other countries across the world. The past few weeks have been characterized by rising cases of COVID-19 infections across the world, and the pandemic has been gaining momentum.
Meanwhile, the economic situation across the globe continues to deteriorate as countries implement countermeasures such as lockdowns, and the closure of borders. This means that people cannot go to work, and businesses have taken a hit. Most governments have been trying to make sure that their economies remain afloat through fiscal stimulus packages and monetary policy adjustments. The U.S dollar has taken a hit due to investor panic and the negative impact of the viral threat on the U.S economy.
How a premature economic refresh might be a win for the Yen
Investors have been rushing to the Yen since it is a haven currency that tends to grow stronger in times of crisis as other currencies grow weaker. The U.S may attempt to reboot the economy through various economic measures. However, it has to make sure that the timing is right; otherwise, the measures will not be effective, especially if the coronavirus continues to spread. In such a situation, we might see a further surge in the value of the Yen.
The U.S and other economies have to make sure that the timing is right for an economic reboot. Stimulus packages will only be effective if the economies are on the path to recovery. Otherwise, releasing the economic stimulus measures while the threat is still active may not have that much of an effect.