The Japanese yen continued its rally downside today amid speculations that Japanese policy makers will ease the monetary policy further. The yen reached the lowest level in more than a year against the sterling, which itself was rather weak.
The yen was soft after the US Federal Reserve eased its already accommodative policy. Firstly, the decision put the Forex market in a risk-on mode, reducing demand for the yen as a safe haven. Secondly, the monetary easing of the US central bank spurred talks that Japan’s central bank will follow suit.
Analysts think that the Bank of Japan will add about ¥5–10 trillion to its asset purchase program, which currently stands at ¥91 trillion. It is widely expected that this weekend’s election in Japan will result in a victory of the opposition Liberal Democratic Party, which is notable for its pro-stimulus rhetoric.
USD/JPY rose from 83.25 to 83.61 and EUR/JPY advanced from 108.83 to 109.30 as of 19:12 GMT today. GBP/JPY was up from 134.43 to 134.64 and its daily high of 135.05 was highest since May 2011.
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