The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥89.60 level and was supported around the ¥88.00 figure. The yen was strong across the board but broad-based U.S. dollar support lifted the pair higher. Japanese monetary authorities ratcheted up the verbal intervention overnight with finance minister Nakagawa reporting We are watching financial markets very carefully and with a high sense of alert, and if necessary we must take prompt action in a broad sense. This is not a problem for Japan alone like in the 1990s. The economic malaise in the United States and Europe is affecting the Japanese economy. I think that's also playing a big role in currency markets and share prices. So I hope that the U.S. and European authorities will take measures to deal with it. And Japan will also do what it must do. Japan has not overtly intervened in the FX market since March 2004 and prior to that, it spent some US$ 394 billion trying to slow the yen’s appreciation. Bank of Japan today reported financial conditions have become tighter even with the overnight call rate near zero per cent, noting Given the sharp deterioration in real economic activity, the stimulative effects from the very low overnight call rate is becoming increasingly limited. This suggests the central bank may resort to additional credit easing measures following its recent announcements that it will purchase corporate bonds and commercial paper and expand eligible collateral. Data released in Japan overnight saw the November all-industries index off 2.3% m/m. The Nikkei 225 stock index lost 3.81% to close at ¥7,745.25. 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 ¥112.50 level and was capped around the ¥116.05 level. The British pound came off vis-à-vis the yen as sterling tested bids around the ¥118.85 level while the Swiss franc while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥75.40 level. In Chinese news, U.S. Treasury Secretary nominee Geithner looks poised to have his nomination approved by the U.S. Senate.
Join the Discussion