Yen Declines as Japanese Economy Gets Worse
Posted on 26. Feb, 2009 by admin in JPY Economic News, Japanese Yen, Japanese Yen Currency
Japan’s currency slid to a 3-month low against the USD after Japan’s trade deficit widened the most in more than two decades, denting its allure as a refuge from the financial crisis. It also weakened versus the EUR after the government said exports tumbled 46% in January, signaling the slump in the world’s second largest economy is deepening. It depreciated to 124.43 per EUR, the lowest level since Jan. 9th. Against the Dollar, the Yen continued to drop to 97.75, the weakest level since Nov. 11th.
The Japanese economy’s contraction last quarter was the worst since 1974 and analysts predict the slump may drag into the next fiscal year. Output may shrink a record 4% starting April 1st, according to some economists. Bank of Japan (BoJ) officials said last week that the economy will remain in a severe state next quarter and companies will struggle to obtain financing as investors shun risk. The bank, which lowered the key overnight lending rate to 0.10% in December, last week said it will buy corporate bonds for the first time in order to stem the credit squeeze.
