Yen Drops to Lowest Level in More Than a Year against the Euro and Dollar

Tradervox.com (Dublin) – The Japanese currency has fallen to the lowest level since August 2011 against the 17-nation currency as bets the Bank of Japan will make additional stimulus increased prior to the start of a policy meeting today. This will be the first BOJ meeting since the election held on December 16. The currency had dropped to its lowest level since April last year against the US Dollar after the data showed that the country’s trade deficit grew in November. The 17-nation currency gained against the greenback for the eighth day, touching a seven-month high as optimism of US lawmakers reaching agreement on the fiscal cliff issue rose. The euro is supported by market speculations that the German business confidence improved last month.

According to Koji Iwata, a Forex Vice President at Mizuho Corporate Bank Ltd in New York, yen is likely to remain lower into the coming year. However, he added that the Bank of Japan will disappoint the market if it doesn’t add stimulus which is expected factoring in the new leadership. The two day meeting may decide to have a 2 percent inflation target, which the new Prime Minister Shinzo Abe requested the BOJ Governor Masaaki Shirikawa to agree on. Abe has also urged the BOJ to make unlimited easing to boost economic growth and curb deflation.

Japanese exports have dropped by 4.1 percent, leaving a trade deficit of 953.4 billion yen, according to a Finance Ministry report released today. The Japanese currency weakened to 11.71 yen per euro, the weakest level since August 30, 2011, before strengthening marginally to 111.65 yen at mid-day trading in Tokyo, which is 0.2 percent below its close yesterday. The Japanese yen was 0.1 percent weaker against the dollar, trading at 84.27, after touching the lowest level since April 12 2011 on December 17 of 84.48.

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