Company: FXY
Filing Date: 2025-02-26
Form Type: 10-K
Source: 0000950170-25-027263
Chunk: 32

Company: Invesco CurrencyShares Japanese Yen Trust
Filing Date: 2025-02-26
Form: 10-K
Item: Item 1B
Chunk 32
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, now down nearly 30% in the last three years. While in mid-Jan, the yen did surge on speculation that the Bank of Japan (BoJ) was going to change its ultra-loose monetary and yield curve control policies after the BoJ allowed the key long-term government bond yield to move in a wider range, the central bank quickly defied this with its announcement to remain status quo. As a result of this and a strengthening dollar through February and early March, the currency pair plunged. While the yen did recover quite significantly for the remainder of March as the dollar weakened on U.S. banking sector turmoil, prices returned to tumbling in the second quarter. Like the first quarter, the BoJ remained ultra-committed to its dovish monetary policy while other central banks hiked, causing global interest rate differentials to the JPY to widen even further. Third quarter was a continuation of the same “ultra-low” narrative, though renewed U.S. dollar strength added additional pressure. While the pair did recover significantly in the fourth quarter, much of it was a factor of the weakening U.S. dollar.

Additionally, the interest rate paid by the Depository has generally trended upward over the past year to the current interest rate of 0.00%, as set forth in the FXY Rate Chart above. As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss.

Critical Accounting Estimates 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Sponsor’s management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period covered by this report. 

In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies. 

The functional currency of the Trust is the Japanese Yen in accordance with ASC 830, Foreign Currency Translation. 

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

Except as described above with respect to fluctuations in the Japanese Yen/USD exchange rate and changes in the nominal annual interest rate paid by the Depository on Japanese Yen held by the Trust, the Trust is not subject to market risk. The Trust does not hold securities and does not invest in derivative instruments. 

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ITEM 8. FINANC