The CAD / JPY currency pair can be traded consistently with high liquidity. The Japanese yen has long been considered a carry trade currency due to the expansion policy introduced by the Bank of Japan as a result of deflation. The Canadian dollar counts as a commodity currency due to the nature of the Canadian economy.
Investors who trade in CAD JPY to benefit from an appreciation of the Canadian currency against the Japanese currency open a long position. Conversely, traders who trade a short position in the Canadian dollar Japanese yen expect the CAD to devalue. When opening a position, two transactions are carried out at the same time. Firstly, a loan is taken out in one currency, secondly, the liquidity provided by the loan is invested in or exchanged in the other currency. In order for an investor to trade Canadian dollars Japanese yen with forex, he has to take out a loan in JPY for a long position and convert it to CAD. In practice, this is done with a single click. If the CAD appreciates against the JPY, the investor makes a profit from this transaction: The liabilities in JPY have lost value due to the change in the exchange rate and can be repaid with less than 100% of the existing balance in CAD. The difference corresponds to the profit.
CAD JPY exchange rate in quantity and price quotation
The Canadian dollar Japanese yen exchange rate is usually given in the format of the quantity quotation. CAD is the base currency for the CAD / JPY format. The price quoted rate then indicates that many JPY units are traded for $ 1.00. An alternative form of presentation is the price quotation. In this format, the rate indicates how many CAD units are trading for 1.00 JPY. The price quotation corresponds to the reciprocal of the quantity quotation.