The yen depreciated vis--vis the U.S. dollar today as the greenback tested offers around the 102.70 level and was supported around the 101.75 level. Most traders expect Bank of Japans Policy Board to keep its overnight call rate target unchanged at 0.50% tonight. Opposition lawmakers in parliament paved the way for Bank of Japan Deputy Governor Shirakawa to become the new Governor of the central bank ahead of this weekends Group of Seven meeting in Washington, D.C. Shirakawas nomination will be formally voted on tomorrow but opposition lawmakers also rejected former MoF official Watanabe to become the new Deputy Governor of the BoJ. Finance minister Nukaga today said I hope to exchange views frankly about the financial instability stemming from the sub-prime loan problem and its impact on the U.S. real economy, as well as on the situation in Europe, stopping short of suggesting G7 officials would discuss actual intervention to prop up the U.S. dollar. Data released in Japan overnight saw the March economy watchers index improve for the second consecutive month with the current conditions measure improving to 36.9. Also, it was reported that corporate failures jumped 20.5% m/m in March. The Nikkei 225 stock index lost 1.49% to close at 13,250.43. Dollar offers are cited around the 103.65 level. The euro moved higher vis--vis the yen as the single currency tested offers around the 161.70 level and was supported around the 160.45 level. The British pound and Swiss franc moved higher vis--vis the yen as the crosses tested offers around the 204.10 and 101.55 levels, respectively. The Chinese yuan appreciated vis--vis the U.S. dollar as the greenback closed at CNY 7.0008 in the over-the-counter market, down from CNY 7.0015. Many China-watchers believe China will allow the pair to trade with a CNY 6.99 handle this week to spotlight the yuans strong appreciation at the G7 meeting. Data released in China this week saw the Q1 entrepreneur confidence index print at 140.6. Goldman Sachs reported Q1 GDP growth will be around 10% with ongoing inflation pressures.
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