Yen Dips as S&P Downgrades Japan

The Japanese yen dropped against other most-traded currencies today as Standard & Poor’s reduced Japan’s sovereign credit rating due to disappointment in the policy makers’ attempts to revive economic growth.
S&P announced on Wednesday:

We are lowering our sovereign credit ratings on Japan to ‘A+/A-1’ from ‘AA-/A-1+’. -The outlook on the long-term rating is stable.

The agency cited the following reason for the decision:

Economic support for Japan’s sovereign creditworthiness has continued to weaken in the past three to four years. Despite showing initial promise, the government’s strategy to revive economic growth and end deflation appears unlikely to reverse this deterioration in the next two to three years.

Obviously, the news was in no way good for the Japanese currency, leading to the drop of the yen.
USD/JPY rose from 120.40 to 120.58 as of 15:26 GMT after falling to 120.10 earlier today. EUR/JPY rallied from 135.70 to 136.24 following the drop to the daily low of 135.14.

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