The Japanese Yen fell against the US Dollar and softened against the Pound due to demand for safe haven currencies waning as hopes grew that a deal will be reached on increasing the USA’s debt ceiling and as Japans current account surplus shrank.
According to the Ministry of Finance Japans current account surplus fell by a whopping 63.7% to ¥161.5 billion on a yearly basis. The figure was far narrower than the ¥540 billion surplus predicted by economists.
The large decline in the surplus was being blamed on an increasing trade deficit. The trade gap increased to ¥885.9 billion, a 33.5% increase compared to the previous year. Some forecasters predicted that the decline could lead to a current-account deficit which in turn could eventually lead to a fiscal crisis. Other data released showed that the trade deficit for the first 20 days of September stood around the ¥994 billion mark; double that of the previous year.
But most market watchers aren’t predicting such a doomsday vision just yet.
“The current account surplus will likely expand gradually as the trade deficit could shrink on the back of a recovery in exports while the income account surplus should grow thanks to a weak yen and Japanese firms’ interest in investing overseas,” said Takuya Hoshino an economist at Dai-Ichi Research Institute.
Also weighing upon the Yen was the increase in demand for riskier assets as hopes grow that a resolution to the political impasse in the United States will come to an end before the October 17th debt ceiling deadline. President Barrack Obama said that he was willing to negotiate and as pressure was put onto the US government from its major creditors such as China and Japan.
“The US cannot afford to default. It’s unthinkable and no will trust us ever again. I don’t think we will default, but it will come down to the wire” said Federal Reserve Bank of Dallas President Richard Fisher.
Current Japanese Yen (JPY) Exchange Rates:
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The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 97.0851 >
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 155.8188 >
The Euro/Japanese Yen Exchange Rate is currently in the region of: 131.7439 >
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 80.5233 >
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 91.7056 >
(Correct as of 11:15 am GMT)