The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.80 level and was capped around the ¥91.65 level. An anonymous Japanese official said the Group of Seven may discuss exchange rates this weekend, a clear indication that Tokyo is displeased with the yen’s ongoing strength. The official also said central bankers and finance officials are becoming increasingly concerned about having an adequate exit strategy to unwind the current massive fiscal stimuli in the financial system. Data released in Japan overnight saw the government’s index of consumer confidence print at 26.4, marginally higher than December’s record low of 26.2. Finance minister Nakagawa verbally intervened against the yen’s strength again overnight saying Be it foreign exchange, stocks or any other markets, rapid swings are damaging to Japan's economy, and therefore won't have a good impact on G7 and Asian nations. We hope to combat such moves decisively. He added Europe in its heart probably wants a weak currency. The United States also wants a weak currency given the current situation, and China must be the same. It's the same situation for all, and it's no good unleashing a competition in currency devaluation. The Nikkei 225 stock index lost 0.29% to close at ¥7,945.94. 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 ¥116.65 level and was capped around the ¥119.00 figure. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥134.20 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥77.45 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8241 in the over-the-counter market, down from CNY 6.8392. Data released in China overnight saw January consumer price inflation up 1.0% y/y while producer price inflation was off 3.3% y/y.
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