There is no bottom to the value of a currency. Did you know that it can be less than 1 yen?
The charm of the Turkish lira yen is a plus swap when you have a buying position.
Depending on the FX broker and the number of positions, some people may expect to get 1,000 yen a day, and another person 100,000 yen a day by buying a large amount of Turkish lira at a low unit price.
However, in order to make money with swaps, the currency must be stable to some extent.
Even if it is a high-value swap, if the price moves backward from the position, you may suffer losses that cannot be covered by the swap.
All in all, a long-term downward trend in the Turkish lira yen is rather difficult to hold for swap purposes.
The Turkish Lira Yen hit a record high of 99 yen in 2007 and has since fallen sharply. Ten years ago in 2013, it was in the 50-yen range, and now it is in the 5-yen range.
There may be people who just look at this and think like this.
Close to zero yen.
It certainly won't go down any further.
It's time to buy!
Because it is close to 0 yen, the lower price is heavy,
Even if you buy here and dig the lower price, there are funds that will not be cut to 0 yen,
But this is a big and dangerous mistake.
There are two reasons.
Suspension of trading by FX brokers.
First, if the value of a currency falls too low, the forex broker may stop trading that currency pair.
Probably forced settlement at the price at the time of suspension. (Please read the terms of use of your FX broker for this area)
Many people may end up with a loss before they can compensate with a swap while holding an unrealized loss.
It seems to be a phenomenon that happened when the Zimbabwean dollar fell due to inflation.
Currency value drops below 1 yen.
Another thing is that the currency will not be 0 yen, but it will be 0.1 yen.
It is theoretically unlikely that the currency value will become 0.
Of course, it will not be negative.
However, it will be less than 1 yen.
how it will be
It continues to dig lower prices in the form of 0.1 yen and 0.01 yen.
In other words, the value of a currency has no bottom.
You know it's scarier than stopping at 0 yen, right?
For example, NZDUSD is around 0.6 and EURGBP is around 0.85.
It is an unfamiliar value against the yen, but it is normal for foreign currency pairs.
It means that the Turkish lira yen can also be in this state.
[Turkish lira yen]
If the price drops from 15 yen to 1000 pips.
It will be 5 yen.
When 1000 pips fell from 5 yen.
Since the currency value does not become negative, it will be 0.2 yen instead of -5 yen.
5 yen - (1000 pips × 0.01 yen/pips) = 0.2 yen
Therefore, if the price drops from 0.2 yen to 1000 pips.
0.0102 yen.
Even if the Turkish lira hits 1 yen, that is the standard of value against the yen from the perspective of Japanese people, and there is no such thing as stopping or weakening the downward momentum.
If the central banks of each country are in a relationship to adjust the currency value like the euro, pound, and Swiss franc, it may stop at a specific price.
However, if there is no reason for the Turkish government to pay close attention to comparisons with the Japanese yen, it is reasonable to assume that even if the currency hits 1 yen, it will continue to decline at the same rate as before.
- Forex brokers may stop trading when the value drops too much
- The value of the currency can continue to dig at 0.1 yen, 0.01 yen, and 0.001 yen.
If you understand these risks and are planning to buy the Turkish lira yen at a low price, you will have a good reading.
However, it's already close to 0 yen, so it won't go down any further, and if you think you're going to buy it here because you have the power to withstand loss cuts to 0 yen, that's a mistake.
I think you should reconsider.
Turkish lira / Yen may fall even further.
By the way, the yen is historically weak right now.
Despite this, the Turkish lira has plummeted against the yen.
Don't forget that if the yen rises from here, the Turkish lira has the potential to fall even further.
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