“Despite the above warnings, FXY has its legitimate uses as a cheap hedging instrument. Anyone anticipating a large yen-denominated expense, such as a contract to buy Japanese goods in the future, could hedge the risk that the it will appreciate by investing in this ETF and locking in the dollar cost today. In the other direction, shorting this fund could provide a useful hedge to U.S. investors with substantial holdings in Japanese equities,” Michael Rawson wrote in a Morningstar analyst report. [Japan ETFs Rise to Start Year]
Investors are looking forward to Friday’s meeting for The Bank of Japan, to decide on new monetary measures. Analysts are expecting an increase of the asset purchase program that the BOJ is implementing. Stock markets tend to perform well after monetary easing has been implemented.
CurrencyShares Japanese Yen Trust
Tisha Guerrero contributed to this article.
Read the disclaimer; Tom Lydon is a board member of the funds for Guggenheim Investments.