The Japanese Yen jumped to a five-week high against the US Dollar as the federal government shutdown in the US continues to weigh upon investor sentiment and as Japanese Prime Minister Shinzo Abe announced plans to go ahead with a sales tax increase.
The closedown of the US federal government contributed to the rise of the Japanese Yen as investors turned to the currency as a safe haven. The US Dollar tumbled as the first government shutdown in 17 years increased fears that it would damage the economic recovery of the world’s largest economy and if it drags on will likely see the Federal Reserve choose to delay tapering its monetary stimulus programme.
“At the moment, investors think the US shutdown will end soon, but if it drags on it could start to hit economic fundamentals, such as consumption and that’ll strengthen the Yen and have a negative impact on Japan” said Takashi Aoki, a Tokyo based fund manager at Mizuho Asset Management CO.
Mr Abe said that Japan’s sales levy will rise by 3% to 8% next April, the first such increase since 1997. The Prime Minister also revealed his plans to counter the negative impacts of the announcement by unveiling a 5 trillion Yen ($51 billion) stimulus programme. The proposed programme will see the government try to boost investment by smaller companies, spend on the 2020 Olympics, give payments to lower earning workers and introduce tax incentives for home purchases.
The next key piece of data for the Yen comes on Friday when the Bank of Japan announces its latest interest rate decision.
Current Japanese Yen (JPY) Exchange Rates
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.2654
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 157.6208
The Euro/Japanese Yen Exchange Rate is currently in the region of: 131.6304
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 79.8963
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 90.8605
(Correct as of 10:20 am GMT)
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