By TraderVox.com
Tradervox.com (Dublin) – The Japanese currency has continued to decline after a report showed that Japanese exports dropped to the least since last year. The yen has extended the longest stretch of decline since July 2005, as pressure on the Bank of Japan to add stimulus declined. The dollar index has increased for the second day as global stock losses spurred the demand for safety in the market. The 17-nation currency advanced against the yen after the Greek Prime Minister Antonis Samaras dismissed Nikos Stavrogiannis from New Democracy Party, increasing speculation that the country is getting closer to establishing austerity measures.
According to Junichi Ishikawa, a Tokyo-based analyst at IG Markets Securities Ltd, there is general assumption that the Bank of Japan will add stimulus, adding that the market is in a risk-off mood which is adding upward pressure on the dollar. The yen weakened as the MSCI Asian Pacific Index of stocks declined by 0.2 percent after the S&P 500 Index of US shares dropped by 1.9 percent on Friday Oct. 19. The yen also slid as a Finance Ministry report showed that Japanese shipments dropped by 10.3 percent in September from last years. Ishikawa predicted that the widening trade deficit will trigger short-term selling of the yen as the market will be expecting a shrinking current account surplus. He also added that due to the bleak economic outlook in Europe and Japan, the market would be going for the dollar as the safe haven currency.
According to Japanese economy Minister Seiji Maehara, Japan requires additional monetary stimulus to encourage growth. In its policy meeting on October 30, the BOJ board is expected to lower its projections for the 2012 and 2013 fiscal years and it will also release 2014 forecasts. The Japanese currency declined by 0.3 percent against the dollar to trade at 79.58 per dollar before the London session was opened today. This is the weakest it has been since August 20. The yen also declined by 0.6 percent against the euro to exchange at 103.90 yen.
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