With the US Dollar falling ahead of the release of initial jobless claims figures, the Yen was able to gain modestly on the ‘Greenback’. During local trade the Yen was lent additional support as data revealed that Japanese investors are continuing to sell foreign bonds.
The Japanese Yen exchange rate was in the region of 98.0600 Yen to one US Dollar as of 10:44 am GMT
Two days of Yen declines came to an end as Japan’s Ministry of Finance reported that in the week ending April 12th the foreign debt held by Japanese investors decreased by 331.9 billion Yen.
According to forex strategist Sean Callow: ‘This tremendous weakening in the Yen has produced little more than profit taking by the Japanese themselves. It gives the impression that money is not flowing out of Japan at all right now, so it’s at least cause for investors to have a bit of a rethink [about the BOJ policy].’
Declining Asian stocks also served to strengthen the Yen.
As one currency strategist observed: ‘Stock declines are taking risk off the table, spurring buying of the Yen. The Key to further Yen weakness is Japanese investors’ willingness to buy overseas assets.’
The Yen could record further gains against the US Dollar following the publication of initial jobless claims data.
If the number of applications for unemployment benefits in the US increases as economist’s have forecast (or if the figure exceeds estimations) fears of ongoing weakness in the world’s largest economy could cause the ‘Greenback’ to soften further against the safe-haven Yen.
During the first half of the week the Yen tumbled by 1.4 per cent against the US Dollar, but as European markets opened the Asian currency had risen to trade in the region of 98.08 against the US Dollar.
The gathering of the Group of 20 Finance Ministers and central bank chiefs, which begins today, could cause Yen volatility, although industry experts are expecting Japan to escape criticism regarding its recent policy decisions and the Yen’s subsequent depreciation.
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