The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥90.45 level and was supported around the ¥90.05 level. Japanese financial markets reopened overnight and the yen was mixed across the board. Minutes from Bank of Japan Policy Board's were released overnight and they indicated Some members were of the view that upside and downside risks were becoming balanced whereas others observed considerable downside risks to the economy. Bank of Japan last week expanded monetary policy further, doubling a three-month lending facility to ¥20 trillion amid strong political pressure to ease policy further. The move is expected to have a limited impact on liquidity and was probably implemented to try and improve market sentiment. Policymakers in February also expressed concern with escalating deflationary pressures and the perception that China may be experiencing an asset bubble. Data released in Japan overnight saw Q4 financial household assets climb 2.5% y/y. Deflationary pressures are expected to remain strong through at least 2011. Dealers continue to cite repatriation flows back into Japan ahead of the fiscal year end next week. The Nikkei 225 stock index lost 0.47% to close at ¥10,774.15. 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 ¥122.60 level and was supported around the ¥121.75 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥135.20 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.45 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8264 in the over-the-counter market, down from CNY 6.8267. People's Bank of China Governor Zhou reported the U.S. and China may have hold bilateral talks to discuss exchange rates, adding political very high profile noise isn't helpful. Zhou added For China, we also have a tremendous task to create more jobs. Traders are starting to focus on a U.S. government report due 15 April that could potentially identify China as a currency manipulator. February industrial profits data will be released this week.
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