The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥91.20 level and was supported around the ¥90.25 level. Bank of Japan Governor Shirakawa reported the central bank will persistently keep interest rates at virtually zero per cent to combat deflation. Shirakawa pledged to supply ample liquidity and maintain stability within the financial system...if it is deemed necessary to achieve that, we are always prepared to act swiftly and decisively. Last week, Shirakawa stepped up the verbal rhetoric noting the BoJ does not tolerate a year-on-year rate of change in the consumer price index equal to or below zero per cent. Data released in Japan overnight saw the November trade surplus come in stronger-than-expected at ¥373.9 billion with exports off 6.2% y/y - marking the fourteenth consecutive monthly decline but up from October's significant 23.2% y/y decline. Shirakawa also warned consumer prices will continue to decline for some time and noted economic improvements will be moderate. The Nikkei 225 stock index climbed 0.41% to close at ¥10,183.47. 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 bids around the ¥130.35 level and was supported around the ¥129.20 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.45 level while the Swiss franc moved higher vis-à-vis the yen and tested bids around the ¥86.35 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8296 in the over-the-counter market, down from CNY 6.8330. People's Bank of China advisor Fan Gang said the U.S. dollar may decline in the very long term and fluctuate in the short term. State Information Center member Zhu Baoliang reported the yuan shouldn't move against the dollar next year. The Chinese government reported industrial output will have expanded 11% in 2009 when final data are tallied.
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