The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥90.70 level and was supported around the ¥90.00 figure. Bank of Japan expanded its quantitative easing program overnight, as expected. The central bank doubled its three-month lending facility to ¥20 trillion. The move is not likely to have a significant impact on the real economy and may marginally increase liquidity. By and large, the central bank made the move to satisfy ongoing calls from the Japanese government to ease policy further. The government's ability to enact more fiscal spending to stimulate final private demand is limited on account of Japan's massive indebtedness. BoJ Governor Shirakawa said the economy is improving a bit more than we expected but warned The Bank of Japan's policy alone can't beat deflation. I wish there was a miracle, but all we can do is persist with our efforts. There were two dissenters on the BoJ Policy Board. The central bank seems to be suffering from a liquidity trap whereby there is little discernible benefit no matter how much liquidity the central bank infuses. Data released in Japan overnight saw the January tertiary industry index improve to +2.9% from -0.9%. The Nikkei 225 stock index climbed 1.17% to close at ¥10,846.98. 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 ¥125.05 level and was supported around the ¥124.05 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥139.35 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥86.15 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8259 in the over-the-counter market, down from CNY 6.8260. People's Bank of China yesterday reported inflation expectations are rising in a quarterly survey released today and this could render it difficult for the government to meet its 3% annual inflation target. Higher inflation expectations will likely propel interest rates higher. The World Bank today called on China to reduce its stimuli programs so that it does cause new asset bubbles.