Yen Continues to Strengthen

Japanese yen continues to strengthen, prompting Prime Minister Yoshihiko Noda to assure Japan’s parliament that leaders are ready to intervene if it becomes necessary.

Japan prefers a weak currency, since it provides an advantage in the realm of exports. Indeed, a number of Japanese companies were hit hard in Quarter 3 due to a stronger yen. Japanese leaders are becoming nervous about how a stronger yen could slow exports, as well as hinder reconstruction efforts in areas hit by the earthquake and tsunami last March.
In addition to vowing to intervene if necessary to keep the yen from appreciating much further in Forex trading, Japanese leaders also announced that it will add a new tax to help with reconstruction in tsunami-hit areas.
For no, the yen is receiving support in currency trading as a safe haven. With the euphoria over yesterday’s eurozone announcement of a plan to contain the sovereign debt crisis fading, Forex traders are looking for safety. Indeed, many are now concerned that the eurozone plan doesn’t address long-term concerns, and that is leading to worries about what could be next, and spurring gains for the yen.
At 16:28 GMT, USD/JPY is losing ground, falling to 75.73 from the open at 75.94. EUR/JPY is also lower, falling to 107.17 from 107.55. GBP/JPY is down to 122.12 from the open at 122.27.

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