Is Oil's Gain Japan's Pain?

Betty Davis in 'All About Eve'
Hulton Archive | Getty Images
Betty Davis in 'All About Eve'

When Bette Davis said, "Fasten your seatbelts, it's going to be a bumpy night," she wasn't talking about the Japanese yen. But if the experts are right, you currency traders out there could do worse than to remember her warning.

The Japanese yen has been holding up relatively well against disturbing news, like downgrades or warnings from major rating agencies. In fact, some traders have been seeking a safe haven in the yen, amid all the turmoil in the Middle East.

Maybe they should take a second look. While Japan doesn't import oil from Libya, it does get 90 percent of its oil from the Middle East. Any disruption to supplies there would be challenging, at best, for the Japanese economy.

Even without actual disruption, if high oil prices stick, Japan may face a deterioration in its terms of trade, with imports costing much more, relative to what that nation is able to export. That just can't help a currency.

The bottom line: the yen has stayed strong despite some headwinds — but remember what Bette Davis said.


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