The Yen has fallen drastically thus far in today’s trading, due to the decision by the Bank of Japan (BoJ) to not conclude its program of purchasing corporate debt in this morning’s Monetary Policy Meeting. This led to speculation that the decision will likely take place during the next meeting instead.
Analysts stated that today’s unexpected decision was due to the inability of small businesses to get large loans. Also this morning, the 8 policy members voted to keep the Japanese Interest Rate at 0.1%. They said out that the economy is pointing up. However, it seems that rates will be kept at this level throughout 2010.
The Bank of Japan did actually raise the evaluation of Japan’s economy for a second month in a row, due to improvements in corporate sentiment. However, Finance Minister Hiroshisa Fujii was more pessimistic, and noted that the economic situation in Japan is far more drastic than Governor of the Bank of Japan Masaaki Shirakawa suggests.
It should be noted, however, that today’s decision was unexpected as the governors remarks earlier in October sparked expectations that the bank’s decision of purchasing corporate debt would expire at the end of the year.
Shirakawa stated that he made this decision largely due to it being more helpful for the policy board to decide the fortune of credit easing policy altogether. In the meantime, he stated that the BoJ intends to find away to make it easier to help fund smaller businesses.
So far today, the JPY is trading nearly 150 pips lower vs. the British currency at 143.27. It should be noted this behavior is also due to lower than forecast Claimant Count Change figures from Britain. The Yen also made large declines vs. both the USD and EUR today.
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