Why does the yen strenthen even when, say, Japan is N.Korea's target? - BBH

Analysts at Brown Brothers Harriman explained that the strength of the Japanese yen puzzles many observers.   

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Key Quotes:

"North Korea's missile test flew over Japan for the first time in a year. Why would investors buy the yen on such news?

There are two types of buying that may be confused. There is the normal buying, which is to increase the exposure to a particular instrument. This is what most people mean when they say "buy." However, there is another type of buying. It is meant to cover a short or a previously sold position.    

The yen and Swiss franc are often used as funding currencies. In effect, this means the currency is borrowed and then sold, and the proceeds are used to buy a higher yielding or better-performing assets like European or emerging market equities, for example. As the heightened geopolitical tensions encouraging liquidating the assets, the funding has to be unwound, and this involves buying the previously slow yen and/or franc."