JPY Sinks as Safe-Haven Currency Ditched
Posted on 05. Mar, 2009 by admin in JPY Economic News, Japanese Yen, Japanese Yen Currency
Forex traders ditched the JPY yesterday as they looked for short-term riskier assets. The Japanese Stock market made massive gains, largely influenced by Chinese Premier Wen Jiabao revealing that China will make drastic moves to push China’s economic growth to 8%, rather than the forecasted 6%. This will include possibly doubling the 4 trillion Yuan ($600 billion) stimulus plan. As a result, stocks climbed yesterday. This came about as the weaker Japanese Yen encouraged confidence on stocks that were highly correlated with exports. The JPY’s bearish behavior yesterday actually came as a relief for the Japanese government, as the Yen has gone from strength to strength against its major currency counterparts since the beginning of the global financial crisis, which has hurt Japanese exports.
The Yen fell by 70 points against the Dollar to close at 99.16. Against the EUR, the Yen plummeted by a dramatic 220 points to close at 125.12. Japan’s currency also declined vs. the Pound by a massive 240 points to close at 140.39. The JPY may slide further today, owing to negative economic data that came from Japan last night revealing that Capital Spending declined more than forecast to -17.3%. This may push forex traders away from the Yen, and to other currencies, as Japan’s economy worsens.
