Weakness continues for the Japanese yen, as the currency heads lower based on the expectation that future economic policy will continue to encourage weakness in the yen.
With the election of Prime Minister Shinzo Abe, economic policy has been changing dramatically. The Bank of Japan will begin buying 13 trillion yen in long-term securities each month. Additionally, Abe effectively ended the BOJ’s independence, putting monetary policy in the hands of the Council on Economic and Fiscal Policy.
On top of that, the target inflation rate was raised from one per cent to two per cent, indicating that the new policymakers aren’t afraid that its quantitative easing measures will increase inflation. Indeed, the new target makes it possible for Japan to see more easing without the worry of exceeding its target inflation.
For now, all of this means yen weakness. Abe has so far been true to his word to aggressive attack the economy, and try to boost its growth. As a result, there isn’t much concern about yen weakness. Indeed, yen weakness remains a desirable state of affairs for Japan.
At 16:53 GMT USD/JPY is up to 91.1000 from the open at 90.7150. EUR/JPY is up to 123.6050 from the open at 122.3950. GBP/JPY is also higher, up to 143.8730 from the open at 142.9950.
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