Yen is mostly lower today as risk aversion sets in after a brief glimpse of optimism yesterday. Even though the BOJ has announced that it will keep its benchmark rate practically at zero, there is enough economic concern that the yen remains in demand.
Indeed, the BOJ cited a number of growing troubles among the reasons that the interest rate will remain the same. Japanese leaders affected concern over the continuing sovereign debt saga in Europe, and mentioned the debt problems that could soon bring turmoil to the US.
While Japanese leaders expressed an expectation that Japan’s economy would eventually see moderate growth, they insist that, for now, the global economy’s likely troubles would limit Japanese growth in the near future, and that a lower interest rate is needed to battle the difficulties.
As is usual when the Japanese yen begins to appreciate, there is speculation about another intervention. Interest rate policy is unlikely to help keep the yen weak, and Japanese leaders have been known to get nervous if the yen appears to be appreciating too fast against its counterparts, especially when it appreciates against the US dollar.
At 14:18 GMT USD/JPY is lower at 76.9700, down from the open at 77.0390. EUR/JPY is lower at 103.8175, down from the open at 104.3095. EUR/GBP is also lower, down to 121.3560 from the open at 121.8660.
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