The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.05 level and was supported around the ¥90.05 level. Bank of Japan Governor Shirakawa continued to talk up Japan's economy, saying given that the emerging and commodity-exporting economies are likely to continue growing at high rates, risks have been becoming balanced, compared with a situation in early spring when risks were generally tilted downside. On interest rates, Shirakawa added The Bank of Japan declared an end to the state of emergency, but it will stand pat until the economy returns to normal. The bank will probably continue its super-low rate policy through early 2011. Finance minister Fujii reported the government will issue additional bonds to cover a shortage in tax revenue in 2009 - 2010. BoJ's Policy Board last week predicted core consumer prices will decline 1.5% in the year ending March 2010, decline 0.8% in the fiscal year ending March 2011, and decline 0.4% in the fiscal year ending March 2012. The central bank last week reported it will stop its purchase of corporate debt and commercial paper at the end of 2009. BoJ Policy Board's next interest rate decision is scheduled for 19 November. The Nikkei 225 stock index climbed 0.42% to close at ¥9,844.31. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥134.95 level and was supported around the ¥132.50 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥150.85 level while the Swiss franc moved lower vis-à-vis the yen and tested offers around the ¥89.35 level. In Chinese news, the U.S. dollar weakened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8205 in the over-the-counter market, down from CNY 6.8215. Data released in China overnight saw the October services sector business activity index decline to 56.5, a four-month low, from 58.1 in September. The Chinese media yesterday reported People's Bank of China is likely to adopt a tighter monetary policy. PBoC Governor Zhou on Friday reported the central bank should maintain a moderate easy monetary policy. Data released yesterday saw October manufacturing expanded at its fastest pace in eighteen months and eighth consecutive month with the CFLP Purchasing Managers' Index rallying to 55.2 from 54.3 in September. It was also reported that PBoC is establishing a new department to manage its foreign exchange policy.
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