The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.55 level and was supported around the ¥92.85 level. The yen was mixed across the board, lacking clear trading direction absent any major Japanese economic data. A report surfaced that the government may shy away from balancing its budget by March 2012 to counter the current economic recession and global turmoil. The Aso government submitted a draft outline to an economic advisory panel today that reprioritizes spending objectives towards economic improvement over fiscal austerity. Traders are talking about news that Toyota will shut down all Japanese production plans for an extended period of time and similar problems are evident at Honda. Bank of Japan reported the December monetary base expanded 1.8% y/y. The Nikkei 225 stock index climbed 0.42% to close at ¥9,080.84. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥125.15 level and was capped around the ¥127.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥138.25 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.35 level. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8360 in the over-the-counter market, up from CNY 6.8312. People’s Bank of China released a forecast that predicts the Chinese economy will expand 8% in 2009. The State Administration of Foreign Exchange indicated it will strengthen risk management of the country’s foreign reserves in 2009 after facing a severe test in 2008.
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