This week, the AUD to JPY exchange rate has risen to its highest level in over 3 years. It has been a tale of 2 stories. Firstly, the Australian dollar has been getting stronger against many major currencies. Secondly, and more importantly, the Japanese Yen has been much weaker. This means that it is now one of the best times to buy Japanese Yen with Australian Dollars in 2021.
Why the Yen is getting weaker
The Japanese yen has fallen in recent weeks, not just against the Australian dollar but against most other major currencies like the US dollar and Euro.
Higher energy prices have driven inflation higher across the globe. Japan imports nearly all of its oil and gas making the economy susceptible to price shocks.
"The spike in global inflation and interest rates may support the USD as a safe haven if short-term interest rates price in a global monetary tightening cycle that it so strong it forces equities to correct lower," with evidence of that scenario likely seen in a decline in USD/JPY and AUD/JPY, he said.
Is now a good time to buy Japanese Yen?
The AUD to JPY has hit a 3 year high making it one of the best times to buy Japanese Yen with Australian dollars. With the rate so high, you are able to buy more Japanese Yen with the same amount of Australian dollars than you could, say 3 months ago when the rate was lower.
Buying yen before a trip is important because Japan, unlike many of its neighbours is a cash economy. How much you need really depends on the style and length of trip you are taking.
The Forecast for the AUD to JPY
In 2021, two of the major Australian banks raised their AUD to JPY forecasts by 5-10%. They predict the AUDJPY to remain higher than 80.00 Yen per Australian dollar. A rising AUDJPY exchange rate suggests investors are more optimistic about the state of the global economy.