Japanese shares plunged on the Nikkei as fears increased regarding further leaks from the Fukushima Daiichi nuclear plant following the earthquake / tsunami. The Japanese Yen continues to gain strength against the weak pound mainly because the yen is seen as a safe haven currency.
The Bank of Japan held interest rates at their current low level between 0 – 0.1%.
The committee also decided to increase the amount of the Asset Purchase Program by 5 trillion Yen to around 40 trillion. It is viewed that this will run until the end of 2012.
Britain’s triple “A” rating remains safe for now. “The strong budgetary consolidation effort and declining fiscal risks arising from the UK financial sector support the stable outlook on the UK’s ‘AAA’ ratings,” said Maria Malas-Mroueh, director in Fitch’s sovereign team. The rating agency also voiced concern that inflationary pressure may hurt the recovery.
Sterling remains under pressure against most currencies as the markets become nervous and look towards the safe haven currencies such as the Yen, USD and CHF.
The Euro continued to strengthen against both the Greenback and Sterling with the fundamentals indicating this will continue in the short term. It is expected that the European Central Bank will increase interest rates at the next meeting while it may still be a few months before the Bank of England entertain this. The Euro is trading on the market in the low 1.15’s against Sterling with little expectation of any improvement in the near future for Euro buyers.
The ratings agency Moody’s cut Portugal’s sovereign debt rating from A1 to A3 retaining a negative outlook, which could mean more downgrading may follow.
The Federal Reserve maintains the current level of interest at near zero percent, however also indicated it would utilise the full QE2 program of $600bn.
Cuba has decided to devalue its currency by around 8% against the US Dollar to help efforts to revive their economy. The Peso mainly used by tourists and foreign firms will be on par with the US Dollar. The 10% taxation will continue to remain in place on all currency exchange from the US Dollar.
