The Japanese Yen has fallen against the Pound and ended four days worth of gains against the US Dollar due to increasing speculation that the Japanese government could implement a corporate tax cut.
The Japanese currency fell against all of its most traded peers after a Japanese newswire reported that the country’s government is planning to make a pledge to promptly start a study on cutting the corporate tax rate.
“Yen was hit by the fact there’s talk of a tax cut, it’s prompted people to think about the fiscal stance a little more. It is seen as another positive for Abenomics. Whenever it’s seen as a risk-on thing people sell the Yen,” said Neil Mellor, a currency strategist at the Bank of New York Mellon.
The Yen had managed to attain some strength in recent days due to the increased demand for safe-haven assets due to the uncertainty gripping the markets in the wake of the US Federal Reserve’s decision to not taper its $85 billion per month monetary easing programme.
Countering the corporation tax cut is the plan to raise the country’s sales tax. On October 1st Prime Minister Shinzo Abe will announce his stimulus package for the country.
“The Yen is weaker today in part because of the announcement from Japan suggesting the corporate tax rate will decline and negate the negative impact of the consumption tax hike,” said Neil Jones, head of hedge-fund sales at Mizuho Bank Ltd. in London. “It’s good for equities as it means a looser fiscal policy and meanwhile a loose monetary policy remains. A strong correlation exists between the Nikkei and Dollar-Yen.”
Current Japanese Yen (JPY) Exchange Rates
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 98.9178
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 159.0443
The Euro/Japanese Yen Exchange Rate is currently in the region of: 133.5976
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 81.9871
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 92.9184
(Correct as of 10:20 am GMT)
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