Following significant falls in the value of the Japanese Yen over recent days, the general sentiment on the FOREX market is of further falls. The Yen, once considered one of the safest currencies, is now in a precarious and perilous state.

The Japanese economy is at its lowest state for decades, even lower than that of most other major economies, with its GDP shrinking by 12.7% and its currency no longer appears to be bucking the trend of world stock markets. On the contrary, it now seems to be getting back in phase. No one is buying Japanese products and Japanese manufacturing operations in foreign countries, particularly in the automotive sector, are seeing a steep decline with significant lay-offs and closures. The downturn in exports is almost 50% with further declines being predicted.

FOREX trading of the Yen against the USD has seen a rapidly increasing number of short positions with a minority remaining long. Poor sentiments are probably exacerbated by concerns that the Japanese government is looking increasingly likely to devalue the Yen despite denials that it is overvalued. Furthermore, the country appears to be preparing to use substantial funds in its currency reserves to prop up its major industries.

All these factors signal further falls in the Yen.