Japanese Yen Lower; Japan Considers Quake Bonds

Japanese yen is heading lower today as traders focus on good earnings in the US. It appears as though a eurozone solution is, yet again, being put off. However, traders are still look for yields, and the yen is lower as a result.

In addition to the current Forex market conditions, some traders are also interested in the news that Japan might soon sell close to one trillion yen in bonds. These “quake bonds” would be used to fund the rebuilding efforts following the devastation experienced during the earthquake and tsunami that hit part of the country.
So far, there is no public plan in the works, but rumors have started that it is a possibility. It will be interesting to see what happens next. Right now, Japanese debt is outperforming most other countries in the area of sovereign debt. Yesterday’s bond sale in Japan resulted in strong demand for 20-year maturities.
Japan’s debt burden is already the largest, so the addition of quake bonds might cause some strain, weakening the yen a little bit. (Although Japanese leaders might welcome more weakness for the yen at this point.) For now, yen looks like it will remain weak for at least a little while.
At 19:42 GMT, USD/JPY is higher at 76.83, up from the open at 76.82. EUR/JPY is higher at 105.86, an increase from the open at 105.77. AUD/JPY is also higher, at 78.80, up from 78.71.

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