The Japanese Yen struck a 2-year trough against the U.S. Dollar during the Asian trading session on expectations that Abe Shinzo’s new government will implement a new and more aggressive stimulus policy, an action which is certain to further depreciate the safe haven Japanese currency. Yesterday, Abe appointed his new cabinet which analysts believe will help him to achieve his many goals to restore the Japanese economy which has been suffering since the devastating earthquake and tsunami nearly two years ago. One possible change that Abe is threatening to invoke if his call for a 2% inflation target is not heeded is the revision of the law which ensures autonomy for the Japanese central bank.
As reported at 1:13 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 85.79 Yen, a gain of 0.2% from yesterday’s late trade in New York; earlier the pair has traded at 85.84 Japanese Yen on the EBS trading platform, a level not seen in 26-months. The greenback is poised to close above 84.95 Yen, which is near the 200-week moving average, a price which hasn’t been achieved in almost exactly five years. The EUR/JPY pair was also higher, striking a 17-month peak when it briefly touched on 113.605 Yen.