Maybe you don’t stay every day in front of a financial screen but you like being informed about the decisions that are taken at the Stock market. .
Being informed is a key point for those that spend their time investing foreign currencies. How does the fall of the interest rates of the Fed influence regarding foreign currencies investment?.
We should consider that high interest rates show that taking money is more expensive, while the reduction of these rates reduces the currency quotation.
After the decision taken by the president of the Fed, Ben Bernanke, of reducing the interest rate in a quarter until taking it to 4.25%, world foreign currencies reacted on the following way.
Foreign currencies investment turned up to be favorable for those that bet for the dollar as after the decision known yesterday the American currency increased slowly in front of the euro. Even thought the dollar falled against the Japanese yen.
On this way, who makes a foreign currency investment should know that the euro reduced its value to 0.3% in front of the American currency, until 1.4670 units. While the dollar falled to 0,7% against the Japanese yen, for some financial analysts American currency would have reactions in the next four weeks, and on the contrary we would confirm what many are asking, take interest rates to 3%.

The depreciation of the currency of a country many times make other currency become stronger.This happens with the relation between the yen and the dollar, both currencies are favored when some of them suffers a change.
After the crisis that suffered Japan during the Second World War, the Asian country stayed in a situation of extreme poverty, after some time it was able to recovery from this adverse scenario and became one of the strongest economies in the world, as a currency as the yen that supports it.
There is an old African proverb that says that when “the elephants fight, the one that suffers is the grass”. This is what happends frequently when there are changes on the exchange rates, or a currency become stronger, there are nations that are favored and others that suffered their consequences. The yen and the dollar are the two sides of the same coin, on the one hand the currency of the northern country has falled, while the yen has increased its value abruptly.
In the exchange yen and dollar, the devaluation of the American currency has favored the American companies that export product abroad and are bought by the nations that see the advantage on the devaluation of the dollar. The appreciation of the yen has been against the interests of the Asian countries as their debts and imports are in the most cases from Japan. This situation provoked the claims of many Asian countries that asked the Japanese government to have less debt payment conditions in yen nominal value to compensate partly the difficulties that they should face since the increase of the yen value, and Japan refused it.
The decision of strengthen a currency and devalue the other has its origins in the economic politic that wants to follows the government of the moment. The yen and the dollar are in an extreme competence system, and so the depreciation of a currency is considered an instrument that is useful to reduce the costs of the exports of a country and be efficient to penetrate at the foreign markets.

Since 2006 the dollar has been losing ground in front of the other foreign currencies. One of the examples that we had in these last days was the fall of the dollar in front of the Japanese yen. After reaching a minimum value of 109,9 yenes per dollar, the trend changed and the Japanese currency devalued more than 0,3% against the dollar, finishing at 110.26%. During this last year the dollas has devalued a 7% regarding to the yen value.The decision of the Central Bank of Japan of manteining the level of the interest rates in a 0,5% annual, brought as a consequence that the dollar continue falling in front of the Japanese currency. Other factor that will be for the dollar were the declarations of Yasuo Fukuda, the first minister of Japan, that said that “the growing trend of the yen has been very fast and can become a problem in the short term”. These declarations brought calm to the markets and the dollar gained ground in front of the yen. There are some economies in which the strengthening of their local currencies in front of the dollar is not advisable as most of their exports are to the United States. A dollar devaluation, would decrease the amount of dollar incomes because of the exports.

Yen/Dollar is one of the most used couples at forex. Actually the yen is the official currency of Japan since 1871 and it is represented by different metals according to its value. There are six kinds of currencies and four circulation bills. One yen for example is made of aluminum, five yenes of tin and ten yenes of bronze.
The yen history has different sides that makes it a very interesting currency. The evolution of this currency has taken it to positions similar to dollar.
The yen value was fixed according to the rules of the world exchange rate where every currency was quoted according to the american dollar. A dollar was equal to 362 yenes. This exchange rate yen/dollar was in force from 1949 to 1971, year in which the United States let the dollar float free. Since then, yen/dollar has reduced its difference, having actually an exchange rate of 110 yenes per dollar.

The dollar, the most common foreign currency is having a very changing year. It is not only losing againg the euro, the most commercialised currency, but also against other foreign currencies. Apart from the brasilean Real, which currency is at the top of the ranking with an appreciation of 21,4% against the dollar, the other foreign currencies are gaining positions in front of the american foreign currency but slowly. Regarding other foreign currencies, the canadian dollar rise to 18% (the currency had been 1 to 1 with the american currency). Other foreign currency that is in the top ten of the ranking is the euro with a profit of the 12,30% in the year. On the other hand, the Swiss franc gained a 10% in the year and was one that got the maximum against the dollar yesterday. It is said that this currency is used as value refuge while volatility scenaries. Other foreign currency that was appreciated this year was the yen that gained 8% in 2007 and since some years has been promising more, but is still not very high. The problem is that the Japanese interest rate is very low and this provokes an stagnancy of the nominal value of the Japanese currency.