Japanese Yen continues to Slide

Thursday, December 3, 2009

The Japanese Yen continued its slide on Wednesday after traders continued to interpret Tuesday’s last minute meeting by the Bank of Japan, as well as a bullish stock market as a reason to unload the low-yielding safe-haven. The Bank of Japan had said in that emergency meeting that it will allocate 10 Trillion Yen, roughly 114 Billion Dollars (US), to a short-term lending program at a fixed rate of .1%. The program is viewed as an alternative to the quantitative easing policies employed in 2001 which saw interest rates drop to zero resulting in a flood of cash entering the markets.

While a majority of analysts do not expect Japan’s anti-deflationary measures to slow the rise of the Yen in the long-term, it was enough to prompt a profit taking selloff. Most of those polled do not believe the measures, which include keeping short-term interest rates depressed, are enough to curb a strong Yen, there is hope that the process itself will lead to a natural decline in the Yen’s value as opposed to a drop that is the direct result of a more invasive governmental policy.

At 11:00PM GMT, the Japanese Yen was trading down .57% to the US Dollar to 87.16, down .63% to the Euro to 131.56, down .94% against the British Pound Sterling to 145.3, down .87% versus the Australian Dollar to 80.86 and down .61% against the Swiss Franc to 87.25.


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