Yesterday’s rally of the yen stalled today on speculations that the new government will spur the Bank of Japan to bolster the struggling nation’s economy by weakening the currency.
The two-day policy meeting of the BoJ will start tomorrow and many market participants believe that the bank will be implementing easing measures more boldly now, after the Liberal Democratic Party has won the elections. Newly elected Prime Minister Shinzo Abe said:
We have to get the economy out of deflation, correct the strong yen, create jobs and boost growth.
The yen was also falling on talks that US politicians are closer to making a deal about avoiding the fiscal cliff.
USD/JPY was at about 83.86 as of 13:29 GMT today after rallying from 83.87 to 84.06. EUR/JPY went up from 110.40 to 110.75 before trading at 110.46.
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