Japanese Yen Drops in Currency Trading on Credit Downgrade

Is this a warning to the U.S.?

S&P, the credit rating agency, cut Japan’s rating from AA to AA-, and that is causing ripples throughout the financial markets. As a result of the cut, the Japanese yen has dropped in currency trading on the FX market.

Japan’s credit rating cut has done for the yen what Japanese officials unsuccessfully tried a few months ago — weakening the yen. It will be interesting to see, though, whether the cost is too high. Concerns about sovereign debt in Japan have been simmering in the background as Europe’s more flamboyant troubles have taken center stage.

The downgrade to Japan also raises interesting questions about what might happen with the U.S. Sovereign debt is a problem in America as well, and concerns about the irregular pace of the economic recovery have been brought to the forefront as jobless claims rise once again. Could the U.S. be the next country to see its credit rating downgraded?

See Also

• Economic News and Forex Trading
  Currency trading on the FX market