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More Government Spending Expected as Tokyo Gets the 2020 Olympics

September 9, 2013 at 13:33 by Miranda Marquit

1,000-yen banknotesYen is weaker today following the announcement that Tokyo has been selected to host the 2020 Olympic Games. Many expect that this will lead to more government spending, as a great deal of infrastructure will be required for the games. With more spending on the horizon, and stimulus measures still underway, more yen weakness is expected.

The economic policies of Prime Minister Shinzo Abe have been popular so far, since they have led to an improvement in the economy. With economic activity picking up, and with many excited about what’s happening in Japan, it is likely that stimulus measures will remain in place, keeping the yen somewhat weak.

Part of the stimulus effort has been government spending. Many expect that the announcement that Tokyo will host the 2020 Olympic Games will lead to even more government spending. With so much money likely to be added to the economy, it is little surprise that the yen is weakening.

Abe has no reason to pull back on his popular reforms (unless inflation starts to get out of control), and their continuance is likely to result in a relatively weak dollar going forward.

At 13:31 GMT USD/JPY is up to 99.3915 from the open at 99.7215. EUR/JPY is up to 131.3605 from the open at 131.2400. GBP/JPY 156.0450 from the open at 155.7450.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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