Yen Drops to 9-Month Low as Euro Sets to a Weekly Gain

By TraderVox.com

Tradervox (Dublin) – The yen declined to a nine-month low as investors speculate further easing by the Bank of Japan. Gains in Asian shares also reduced the demand for the currency.  The yen declined against all of its major peers after Japanese Finance Minister Jun Azumi indicated that he expects the BOJ to take “appropriate” steps. The yen also declined prior to releasing a U.S. data report today that may show an increase in payrolls, reducing demand for lower-yielding assets. The euro is headed for a weekly increase prior to reports forecast to confirm a rebound in French industrial production and German exports.

According to Toshiya Yamauchi, A Senior Currency Analyst in Tokyo at Ueda Harlow LTD., the yen might remain bearish among the major currencies since investors are focused on the Bank of Japan’s actions especially the easing prospects.

The yen declined by 0.3 percent to settle at 81.80 per dollar after it had earlier touched a low of 81.89. This is the weakest it has been since May 26 last year. Against the euro, the yen declined by 0.3 percent to reach 108.05. The euro remained little unchanged at $1.3269. It rose 0.5 percent in the past five days.

The Bank of Japan had on February 14 set the inflation target at one percent and indicated that it would raise the government debt purchases. The Bank of Japan is set to expand its stimulus at its meeting next week as an indication of its commitment to easing deflation.

Reports released yesterday show that Japan reported a record deficit in the January current account. This is the widest measure of trade used by economists to measure a country’s trade margins. The deficit is as a result of shutting down of nuclear reactors due to the March 11 earthquake. This has resulted to an increase in the import of liquefied natural gas.

The yen further declined against the US dollar amidst indications that the US economy is recovering. Today’s job report is expected to show that employers added more than 200,000 jobs for the third month in February.

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