During the local session the Yen shed much of its recent gains against the US Dollar, falling by over 1 per cent to a low of 98.28 Yen per Dollar.
The Japanese Yen exchange rate was in the region of 97.9500 Yen to one US Dollar as of 11:15 am GMT
The Asian currency dropped against a bullish US Dollar after the latter currency broadly strengthened in response to the highly-anticipated outcome of the Federal Reserve’s two-day policy meeting.
After extensive discussion with the Federal Open Market Committee, Federal Reserve Chairman Ben Bernanke asserted that if the economic situation in the US should continue to improve US quantitative easing could be phased out by the end of next year.
Bernanke stated: ‘If the incoming data are broadly consistent with this forecast, the committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year.’
The FOMC statement saw the USD/JPY pairing breach the 97 Yen per Dollar level
A domestic report also adversely affected the Yen. Data showing that the stockpile of funds held by Japanese companies hit record-levels in the first quarter of this year, with investment being poured overseas, has highlighted the challenge Japan’s Prime Minister Shinzo Abe faces when it comes to stimulating wages and investment within the nation.
According to JPMorgan Chase & Co economist Masaaki Kanno: ‘This is a very big problem in Japan’s economic system. The problem is a lack of corporate governance – the role of shareholders should be to urge managers to use cash more profitably.’
Kanno added that Abe’s attempts to turn Japan’s economy around will face real resistance unless corporate governance practises are reassessed and the cash pile distributed.
If this afternoon’s US data, including initial jobless claims and existing home sales, is positive (thereby strengthening economic conditions in the US and increasing the odds of QE being tapered soon) the USD/JPY pairing could extend gains.
Current Japanese Yen (JPY) Exchange Rates
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The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.9500 >
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 151.5980 >
The Euro/Japanese Yen Exchange Rate is currently in the region of: 129.5010 >
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 76.0982 <
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 90.1666 >
(Correct as of 11:15 GMT)