The Japanese Yen has risen for a second day against the US Dollar, extending its recovery from a two and a half year low. Meanwhile the British Pound fell to its weakest level in a month.
The Yens strengthening comes on the back of speculation that the newly elected Abe government has already implemented many of the stimulus measures proposed by the Bank of Japan. As a result the Asian currency has made gains against all of its 16 most traded peers even as the nation’s finance minister revealed that the BJ will buy European sovereign debt to help weaken the currency.
The BOJ is due to meet on January 21st with policy makers expected to make further boosts to the monetary easing measures already implemented in December. They are expected to refrain from raising their inflation target of 1%.
Japanese Finance Minister Taro Aso told reporters in Tokyo that Japan will use foreign-exchange reserves to buy European Stability Mechanism bonds to help weaken the Yen; he added that the decision would also the financial stability of Europe as well.
“Quite a lot is priced in for the Bank of Japan to do, and there’s still a lot to happen,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “Markets are backing off a bit. Short-term, we may need to see some action to sustain the move lower.”
Elsewhere the Pound dropped ahead of this week’s Bank of England meeting at which policy makers are expected to keep interest rates at its current record low level in an effort to kick-start the UKs stalling economy. The fall comes after an industry report showed that the UK retail sales slowed over the Christmas period.
The Pound to Euro exchange rate is currently trading at 1.2267
The Pound to US Dollar exchange rate is currently trading at 1.6038
The Pound to Australian Dollar exchange rate is currently trading at 1.5288
The Euro to US Dollar exchange rate is currently trading at 1.3071
The Euro to Pound exchange rate is currently trading at 0.8149
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