The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥94.40 level and was supported around the ¥93.30 level. The Japanese government downgraded its economic assessment for the fifth consecutive month, the longest period of consecutive downgrades since 2001. The government reported the economy is worsening rapidly while in a severe situation and this is the most pessimistic the government has been since 1975. Many Japan-watchers believe the Aso government will soon draft its fourth fiscal stimulus package since August. Data released in Japan overnight saw the gross domestic product gap print at -4.3% in the October – December period, the worst print since the -4.5% figure in Q1 2002, and this means supply far exceeds demand. This also reflects problems faced by Japan’s all-important export sector where the yen’s relative strength has eroded Japan’s trade surplus. The Nikkei 225 stock index climbed 0.31% to close at ¥7,557.65. 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 ¥120.35 level and was supported around the ¥117.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥136.35 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥80.55 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8348 in the over-the-counter market, down from CNY 6.8378.
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