Yen Drops Against Majors as Bets of Additional BOJ Stimulus Increases

By TraderVox.com

Tradervox.com (Dublin) – The Japanese currency dropped against all major currencies as the market projected the Bank of Japan will add monetary easing to boost economic growth in the country. Concerns on the nation’s economic state rose after reports indicate the nation might be headed into a recession. The yen weakened against the dollar prior to the release of a report projected to confirm Japanese economy shrank, adding to calls for additional stimulus from opposition leader and preferred candidate in the coming elections in December 16. The 17-nation currency remained weak against the US dollar after experiencing the biggest drop in a month. The currency also dropped prior to a report from Germany expected to show industrial production in the country stagnated.

According to Khoon Goh, a Singapore-based currency strategist at Australia & New Zealand Banking Group ltd, the possibility of yen dropping further against the dollar increases as the election draws near and as calls for a more proactive BOJ intensifies. The drop has come as the market predicts a 0.9 percent contraction in the Japanese economy in the third quarter. The report will be released on December 10. Another economic survey shows that economists expect the economy to shrink in the current quarter. The poor results have intensified Shinzo Abe’s calls for further easing. Abe, the leader of the Liberal Democratic Party, has been leading in opinion polls before parliamentary election.

The Japanese yen, which has dropped by 9.7 percent this year, dropped by 0.1 percent against the dollar to trade at 82.49 yen during the mid day trading in Tokyo.  The currency weakened by 0.1 percent against the euro to exchange at 106.98, cutting its 0.1 percent weekly gain. The single currency was little changed against the dollar, trading at $1.2968 from yester, when it declined by 0.8 percent. This is the biggest decline since November 2. The euro is set for a 0.1 percent weekly decline against the dollar.

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