Yen`s Upsurge Boosts Currency Margin Trading in Japan

Tokyo, Nov. 8 (Jiji Press)--Foreign exchange margin trading is attracting renewed interest in Japan recently as individuals increasingly aim to take advantage of the strength of their own currency, the yen, to buy foreign money cheap.

While the financial crisis escalated worldwide over the past few
months, the yen outperformed the dollar and other foreign currencies since
global investors steered clear of risky assets including high-yielding
currencies. In October, the dollar touched a 13-year low just below 91yen.
Now that foreign currencies have come down sharply, a growing
number of Japanese individual investors are snapping them up through their
margin trading accounts in anticipation of their future rises.
But margin traders generally are taking a more cautious approach
than in the past because many participants were bruised by the rapid
currency swings of the summer last year, when the problem of soured U.S.
subprime mortgages surfaced, according to industry sources.
At Gaitame.Com Co., Japan's largest provider of foreign exchange
margin trading services, turnover in October tripled from the previous
month.
Although the surge partly reflects settlements of loss-making bets,
it also underscores an upturn in investor appetite for foreign currencies,
according to Masaaki Saito, an official at Gaitame.Com.
Rival NTT Smart Trade Inc. is set to allow its users to invest from
1,000 currency units from Nov. 17, slashing the minimum trading unit to
one-10th of the current amount, because it has noticed growing demand for
small-lot investments with reduced risks, according to Takashi Kudo, chief
of the company's marketing and planning department.
Foreign exchange margin trading of less than 100,000 trading units
soared to account for 44.2 pct of overall turnover at the company in October
from 29.4 pct in July-September.
Further highlighting their risk aversion, investors are opting for
smaller leverage.
NTT Smart Trade provides a margin trading service that is leveraged
exactly equal to the value of margin deposits, which is the same as
depositing money in foreign currency-based bank accounts. In October,
turnover for such trading tripled from the previous month, with investors
lured by cheaper fees for margin trading than for foreign currency deposits.
Central Tanshi Online Trading Co., meanwhile, has enjoyed
popularity of margin trading with leverage of four to six times margin
deposits. Since mid-October, when the dollar fell below the 100-yen
threshold, the pace of new account openings has doubled, according to
company spokesman Ryuichi Goto.