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The NZD/JPY currency pair is a real exotic asset from the currencies of two highly developed countries!
The NZD/JPY currency pair is a cross-rate asset pegged to the US dollar. It is formed by a combination of the New Zealand dollar and the Japanese yen. The ratio indicates the value of the first currency in terms of yen.
What do people say about the couple?
The New Zealand dollar, in the popular form of "kiwi", serves as the main monetary unit of the country with an agricultural economic bias. The currency of Japan is the monetary unit in a high-tech country.
Most often, trading is carried out with an emphasis on the difference in interest rates, while taking into account the dynamics of other rates in which the yen is present.
Despite the fact that "kiwi yen" is not widely popular in the Forex market, it has its own circle of admirers. In particular, you can apply the carry trade strategy and hedge risks using binary options.
For example with a brokereach trader receives favorable trading conditions to unlock their investment potential and increase their capital!
Structure of the NZD/JPY currency pair - characteristics of each element
The currency pair consists of two interesting elements - the New Zealand dollar and the Japanese yen.
The New Zealand dollar, or kiwi, acts as the official currency in the state and its adjacent islands. The country is in the top 5 of the world ranking as an attractive business area, and this is already evidence of a lot.
New Zealand follows the principle of “regulate more, regulate less”, with private business taking the largest share in the structure. Only a small number of enterprises remain under state control.
There is a very favorable microclimate here - there is almost no corruption, and the inflation rate is always low. For more than 160 years, business conditions have remained stable and profitable, unaffected by political changes and new government officials.
The yen is the official currency of Japan, which has been in circulation since 1871. The Japanese market has long been considered very attractive, and investing in national stocks is always accompanied by the need for a large amount of currency, which causes the appreciation of the yen.
The Japanese economy is export-oriented, so there is always interest in the low exchange rate of the yen against the dollar and European currencies. The central bank has to constantly maintain a policy of depreciating its currency in order to protect the interests of exporters.
The country has the lowest interest rate with an indicator of 0.1 percent, while the Japanese regulator constantly analyzes the situation on the international market and controls the volatility of its currency in order to avoid unnecessary price fluctuations.
Features of the positions of the NZD/JPY currency pair on the chart
NZD/JPY is a profitable trading pair for carry trading due to the difference in interest rates. Despite the fact that there is no US dollar in the pair, it still has a significant impact on the position of the asset when making purchase and sale transactions.
Most often, there is a high spread, and volatility is characterized by a moderate or slightly lower level, which makes it impossible to apply scalping strategies. But the pair is suitable for traders who prefer positional trading.
Both countries - New Zealand and Japan - are characterized by a small area, by the fact that they are islands, while they have a high level of economic development and its individual areas. Despite this similarity, each is distinguished by its cultural heritage and the specifics of the implementation of the economic development model.
In New Zealand, the largest share of exports is in the agricultural sector, which is why its dollar is identified as a commodity currency. The economic structure is presented as follows:
- 71 percent of GDP is trade and services;
- 24.3 percent is industrial production;
- 4.7 percent is agriculture.
Due to the beautiful nature and calm environment, tourists love the country, this direction is actively developing and improving.
Japan's relief features do not allow for active agriculture, but the country still occupies a leading position in rice cultivation and fishing.
The main economic specialization is the high-tech sector, international trade relations and the provision of services in the fields of education, insurance, IT, and medicine. The structure of the economy is as follows:
- Services - 71.4 percent of GDP;
- Industrial sector - 27.5 percent of GDP;
- Agriculture - 1.2 percent of GDP.
How to correctly use the NZD/JPY currency pair in trading?
When predicting the movement, it is important to take into account the fact that the kiwi is a commodity currency and depends on the cost of oil and agricultural products.
The position of the yen is influenced by climatic and weather conditions, natural disasters.
In aggregate, the analysis of a trading asset is carried out taking into account the above factors and macroeconomic indicators:
- GDP level;
- Trade balance;
- Dynamics of inflation;
- Interest rate;
- The level of business activity.
It is impossible to get a quick profit when working with this asset, in addition, carry trade transactions also do not give the expected results. However, having experience and focusing on the medium and long term, you can always count on a stable income.
NZD/JPY is actively involved in binary trading to hedge against risks and get even more profit!
This pair is considered universal and can be used by beginners to adapt to the financial market, but experienced traders also include it in their portfolio using fundamental analysis or news trading.
A live chart for the NZDJPY currency pair is an ideal solution for those who do not want to install MT4 for analysis.