The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.90 level and was capped around the ¥89.95 level. Bank of Japan announced a scheme overnight to purchase US$ 11 billion in equities owned by Japanese banks to mitigate some of their exposure to the financial markets. Bank of Japan Governor Shirakawa reported If you look at what kind of risks big Japanese banks have now, the biggest risk is not credit risk. It's volatility in share prices. Share prices fluctuate on various factors, not just domestic factors. Right now international markets are not stable and Japanese share prices are falling. Those banks always have to consider such risks. That's the reality. BoJ’s new shares scheme will probably start at the end of February and many traders are skeptical it will have an impact on the real economy. Another idea being floated is the possibility of the government issuing money and not just Bank of Japan. Data released in Japan overnight saw December overtime pay decline by its largest annual amount in nearly sixteen years. Also, the January monetary base was up 3.9% y/y. The Nikkei 225 stock index lost 0.62% to close at ¥7,825.51. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥116.05 level and was supported around the ¥114.35 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥128.25 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥77.95 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8399 in the over-the-counter market, down from CNY 6.8490. China is preparing to spend CNY 130 billion from the second tranche of its stimulus package.
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