What is MXN/JPY?
MXN/JPY refers to the currency pair composed of the Mexican peso (MXN) and the Japanese yen (JPY). It represents how many Japanese yen are required to buy one Mexican peso. If, for example, the exchange rate is 8.42, this means that 1 Mexican peso is equivalent to 8.42 Japanese yen.
The Japanese yen is frequently regarded as a safe-haven asset, making it an attractive way to de-risk portfolios during times of financial or economic uncertainty.
The Mexican peso has historically been sensitive to fluctuations in oil prices due to Mexico's significant reliance on oil exports as a source of revenue. The connection between the Mexican peso and oil prices is primarily driven by the country's oil industry and government policies related to oil revenues.
What affects the price of the MXN/JPY pair?
The price of the MXNJPY currency pair can be influenced by several factors, including:
Commodity Prices: Both Mexico and Japan are major importers of various commodities. Changes in commodity prices, especially those that are significant to their economies, can influence their respective currencies. Mexico, for example, is a major oil producer and exporter, and oil exports have been a crucial component of the country's economy for many years. When oil prices are high and stable, Mexico benefits from increased oil export revenues, which can strengthen the Mexican peso against other currencies.
Central Bank Policies: The Bank of Mexico (Banco de México) and the Bank of Japan (BOJ) can affect the MXN/JPY exchange rate by making decisions about interest rates, monetary policy, and quantitative easing measures. Higher interest rates in a country tend to attract foreign investment, leading to currency appreciation, while lower rates can have the opposite effect.
Political Stability: Investor confidence and the exchange rate can be affected by political stability and certainty in both Mexico and Japan. Currency market volatility can be caused by political events, elections, and policy changes.
Economic Indicators: Gross Domestic Product (GDP) growth, inflation rates, employment data, and trade balances for both Mexico and Japan can significantly impact their respective currencies' values. Positive economic data can strengthen a currency, while negative data can weaken it.
Global Economic Conditions: Economic conditions in other major economies can also indirectly affect the MXN/JPY exchange rate. For example, economic developments in the United States, Mexico's largest trading partner, can have an impact on the Mexican peso.
What to watch out when trading MXN/JPY?
When trading the MXNJPY forex pair (Mexican peso against the Japanese yen), there are several factors to watch out for. Here are some key considerations:
- Mexico, Japan, and the USA Consumer Price Index (CPI)
- Interest Rate Decision—US Federal Reserve, Bank of Mexico, and Bank of Japan
- Mexico and Japan Employment Data and Gross Domestic Product (GDP)
- Mexico and Japan Trade Balance
- Mexico Crude Oil Production
- Natural disasters affecting Japan