Yen Sinks as Bank of Japan Expands Asset Purchases

The Japanese yen slumped to the lowest level since November against the US dollar and also fell against some other majors after the Bank of Japan unexpectedly increased its asset purchase program.
The Bank of Japan unexpectedly expanded its asset purchase program by 10 trillion yen and set its inflation target to 1 percent. That’s just another attempt by the central bank to counter a deflation and support the nation’s economy.
Earlier the yen was rising as European finance ministers canceled their meeting in Brussels tomorrow amid doubts that Greece would fulfill its promises. The finance chiefs will hold a teleconference instead. Retail sales in the United States rose less than predicted, adding to the appeal of the yen. The current global macroeconomic environment is actually very supportive to the Japanese currency, but the BoJ spoiled the day for the yen. The currency may still resume its gains if demand for safety would outweigh the stimulating measures of Japan’s central bank.
USD/JPY surged from 77.57 to 78.43 as of 21:54 GMT today and touched 78.55 — the highest price since November 1. EUR/JPY climbed from 102.27 to 102.99 and GBP/JPY advanced from 122.29 to 123.08.

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