2013-02-27 15:23:46 Forex News – Yen’s recent rebound a challenge to BOJ monetary policy
February 27, 2013 3:23 pm
The yen has gained sharply this week due to safe have demand amidst the turmoil in Italy which renewed concerns of a debt crisis in the euro zone. The political deadlock in Italy are a wake-up call to investors that Europe is not out of the woods yet. However the rising yen again has posed a challenge to Prime Minister Shinzo Abe, whose demand for drastic monetary easing sent the Japanese currency tumbling in recent weeks.
Shinzo Abe who recently was installed as new Prime Minister after Japan’s elections in December, pledged to adopt aggressive policies to end deflation and revive economic growth in the sluggish Japanese economy.
The fall in the yen has begun to help exporters but on Monday yen was boosted suddenly as investors sought safety, and apparently the yen is still considered a safe haven asset. From this aspect, the safe haven status of yen will limit the impact of Japan’s monetary policy easing on the currency. Some investors also say the Bank of Japan will struggle to live up to expectations of bold new stimulus.
The yen rose sharply on Monday after Italy’s elections resulted in gridlock and investors sought refuge in the yen, which led to its biggest daily gain against the dollar and the euro since May 2010.
Yen rose an impressive 5 percent against euro within six hours as EURJPY fell to a one-month low of 118.72 yen. USDJPY fell to 90.85. These levels have been retained since Monday.
The yen has gained sharply this week due to safe have demand amidst the turmoil in Italy which renewed concerns of a debt crisis in the euro zone. The political deadlock in Italy are a wake-up call to investors that Europe is not out of the woods yet. However the rising yen again has posed a challenge to Prime Minister Shinzo Abe, whose demand for drastic monetary easing sent the Japanese currency tumbling in recent weeks.
Shinzo Abe who recently was installed as new Prime Minister after Japan’s elections in December, pledged to adopt aggressive policies to end deflation and revive economic growth in the sluggish Japanese economy.
The fall in the yen has begun to help exporters but on Monday yen was boosted suddenly as investors sought safety, and apparently the yen is still considered a safe haven asset. From this aspect, the safe haven status of yen will limit the impact of Japan’s monetary policy easing on the currency. Some investors also say the Bank of Japan will struggle to live up to expectations of bold new stimulus.
The yen rose sharply on Monday after Italy’s elections resulted in gridlock and investors sought refuge in the yen, which led to its biggest daily gain against the dollar and the euro since May 2010.
Yen rose an impressive 5 percent against euro within six hours as EURJPY fell to a one-month low of 118.72 yen. USDJPY fell to 90.85. These levels have been retained since Monday.
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