By: Barbara Zigah

The U.S. Dollar slipped against the Japanese Yen after the government of Japan announced a $100 billion line of credit facility intended to help Japanese business cope with the detrimental effects of a too strong Japanese Yen. The line of credit will help to facilitate the acquisition of overseas firms as well as procurement of foreign energy and resources. Nonetheless, analysts are doubtful that these central bank’s measures can calm market fears following last week’s record high of 75.941 Japanese Yen, given that they fail to address the underlying cause. Markets had been hopeful that the Japanese authorities would provide some stronger measures to curtail the Yen’s rise, so any impact is likely to be short-lived at best.

The U.S. Dollar fell from the intra-day peak of 76.88 Japanese Yen following the single-notch downgrade of Japan’s debt by Moody’s credit rating agency to Aa3. The agency cited a debt build-up and ineffective political leadership as key reasons for the downgrade. As reported at 1:59 p.m. (JST) in Tokyo, the U.S. Dollar was trading down against the Yen at 76.62 Yen, off the session low of 76.53 Yen following the announcement of the line of credit scheme. Most recently, the USD/JPY pair was lower at 76.6550.