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Pound Japanese Yen Exchange Rate Falls as Japan Announces Record Spending Package

Pound Japanese Yen (GBP/JPY) Exchange Rate Drops as Yen Boosted by Spending

The Pound Japanese Yen Exchange Rate has fallen this morning as the Japanese Yen is strengthened by the announcement of a significant spending package.

At time of writing the GBP/JPY exchange rate is at around ¥153.0300 which is down -0.8% from this morning’s opening figures.

Japanese Yen (JPY) Soars as PM Kishida Announces Record Stimulus Plan

The Japanese Yen (JPY) has been buoyed today by the Japanese government’s announcement of a $490 billion spending package.

The move comes amid criticism that the Japanese government has lagged significantly behind its competitors. Policymakers are hoping that the spending package will help to underpin the economy after spending ballooned since the start of the COVID-19 pandemic.

James Brady, an analyst at Teneo, showed surprise at the move given that current Prime Minister Fumio Kishida is considered to be a financially conservative leader:

‘The reflationary monetary policy and go-big-or-go-home fiscal policy pioneered by (former Premier) Shinzo Abe is now the orthodoxy. Though Kishida has been known in the past for being somewhat hawkish, he appears set to continue the Abenomics paradigm for several more years.

Critics have been quick to label the spending as ‘wasteful’ as Japan’s massive spending has already left the country with long-term debt approximately double the size of its $5 trillion economy.

Pound (GBP) Dips Despite Upbeat Retail Data

The Pound (GBP) has dipped today following higher than forecast retail sales figures. Trading in Sterling has remained risk-averse today despite the figures showing further signs of the UK’s economic recovery.

Figures rose by 0.8%, above forecasts of 5.8%, and are now 5.8% above pre-pandemic sales levels from February 2020. The upbeat data has been driven largely by fears of shortages in retail prompting customers to shop for Christmas earlier than usual. Halloween also provided a boost to retail this year, as decorations and sweets were purchased in far higher quantities than the previous year.

The Bank of England (BoE) is likely to see additional pressure to raise interest rates ahead of schedule due to this data, as the UK economy continues to show signs of growth. The Pound may see further movement today as investors place speculative bets on the central bank’s actions.