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Japanese Yen Slides As Leading Economic Indicators Weaken

August 29, 2019 at 19:37 by Andrew Moran

Japanese currency and coinsThe Japanese yen is tumbling toward the end of the trading week, driven by a decline in several leading economic indicators. With the yen experiencing spikes since Tokyo reached a trade agreement in principle with the US, officials say that they monitoring the currency “with a sense of urgency.” Investors were once again assured by the central bank that the world’s third-largest economy is not showing any signs of a recession.

Japan’s Composite Index of coincident indicators that measure current economic conditions slipped to 100.4 in June, down from 103.4 in May. The Cabinet Office’s Leading Economic Index also fell to 93.3 in June, down from 94.9 in May.

On Thursday, the Consumer Confidence Index dropped 0.7 points to 37.1 in August. The index has fallen for 15 consecutive months.

In other data, according to the Ministry of Finance, bond investments held by Japanese nationals living abroad tumbled by $8.5 billion in the week ending August 24. This snaps a three-week streak that saw Japanese foreign bond investments swell by about $9 billion.

Speaking at a news conference on Thursday, Japanese Finance Minister Taro Aso confirmed that the federal government will pay close attention to the yen’s movements, especially after the currency experienced extreme spikes in the currency. Refusing to mention any specifics, Aso stated that it is imperative that the yen, which is considered a safe-haven asset, remains stable.

Currency stability is important. We must closely watch the currency market moves with a sense of urgency.

Bank of Japan (BOJ) board member Hitoshi Suzuki said in a speech that it is important for the central bank to concentrate on both price stability and the financial system’s stability. Should the financial system experience turmoil, he noted, then it would make it harder for the BOJ to achieve its price target.

In what may relieve investors, Suzuki stated that the Japanese economy is not showing any signs of a recession, though he did caution that the impact of the upcoming national sales tax hike needs to be monitored closely.

Overall, according to Suzuki, the national economy is expanding, even with uncertainty in the global market.

The USD/JPY currency pair rose 0.44% to 106.59, from an opening of 106.12, at 19:29 GMT on Thursday. The EUR/JPY jumped 0.25% to 117.86, from an opening of 117.55.

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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