The Japanese Yen has climbed beyond 94 per Dollar for the first time in more than two months as Japanese investors cut their holdings of overseas stocks and bonds and as the World Bank lowered its global growth forecast.
The cause for the Yen’s strengthening is the ongoing confusion over whether the world’s Central Bank’s will choose to slow down their asset purchasing programmes in the near future.
The US Federal Reserve is leading the way with the Fed’s Chairman Ben Bernanke saying that he would slow the Bank’s monetary easing policies if the US economy shows signs of significant improvement. As a result of the uncertainty investors have chosen to favour the safe haven Yen and ‘Greenback’ causing a rout on many developing and emerging currencies.
Bank of Japan decision led to disappoint
The Bank of Japan’s decision to not add to its current monetary easing programme led to disappointment in the markets.
“Japanese stocks are back to levels last seen when the Bank of Japan announced stimulus measures on April 4 and the yen is doing almost exactly the same,” said the head of currency strategy at Canadian Imperial Bank of Commerce. “Global growth being downgraded hasn’t helped risk sentiment today. The pace of the move in the yen and stocks is extreme.”
The World Bank altered its previous forecast, downgrading its expectations. The world economy will expand by 2.2% in 2013, less than its January forecast for growth of 2.4% according to its report.
The next major movement for the USD/JPY will occur when Federal Reserve policy makers next meet for their two day meeting on June the 18th.
“The FOMC meeting will be the biggest focus and economic data will also be closely watched,” said Koji Iwata, a vice president of foreign-exchange trading at Mizuho Corporate Bank Ltd. in New York. “The slowing of Fed easing will be a tipping point for Dollar-Yen. Unless the volatility in the Japanese equity market recedes, the Dollar may struggle to push higher.”
Current Japanese Yen (JPY) Exchange Rates
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 94.1674
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 147.4901
The Euro/Japanese Yen Exchange Rate is currently in the region of: 125.6767
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 74.8561
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 89.3348
(Correct as of 10:35 am GMT)