Question

In principle, how can an individual trader hope to profit from buying yen in advance of an anticipated fall in the value of the US dollar in relation to the Japanese yen?

Answer 1

In Principle -

Suppose person A, has got 100 dollars today. The rate at the time of purchase is 1$ = 110 Yen. The person is able to purchase 100*110 = 11000 Yen with $ 100. The person makes the purchase in anticipation of fall of $ in relation to Yen.

One week later the $ fall in relation to Yen. The rate is 1$ = 100 Yen. Now the person sells the Yen to get back  $110. Hence, the person makes a profit of $10 in the transaction. The same can also be implemented in futures.