The Japanese yen dropped yesterday and maintained its losses today on speculation that the likely victory of the opposition party in the coming elections will lead to further interventions from policy makers in order to support the economy.
Japanese Prime Minister Yoshihiko Noda hinted yesterday that he may dissolve the parliament, triggering elections. Analysts believe that the elections will favor the opposition Liberal Democratic Party. The party’s leader Shinzo Abe called the Bank of Japan for more aggressive easing. Such comments mean that victory of his party will likely lead to additional interventions from the BoJ.
The yen dropped even versus the dollar, which was weakened by the minutes of the Federal Reserve policy meeting that showed probability of additional easing from the US central bank. The minutes contributed to risk appetite of traders, weakening the yen further against other currencies.
USD/JPY climbed from 79.37 to 80.23 yesterday and traded at about 80.20 as of 3:26 GMT today. EUR/JPY was up from 100.82 to 102.18 and GBP/JPY advanced from 125.96 to 127.08 on the previous session and remained near yesterday’s close at today’s session.
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