BOJ Sends Yen Broadly Lower

During the Asian trading session the Japanese Yen struck a 2½ year trough against the greenback and a multi-months low against the common currency Euro as investors focus on the government’s policies and plans to restore economic health to Japan. As reported at 1:24 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 90.46 Yen, a gain of 0.1% from Thursday’s late trade in New York and the highest level traded since June 2010; since mid-November, the greenback has surged some 14% on the Yen. Meanwhile the EUR/JPY pair traded at a session high of 121.32 Yen before slipping more recently to 120.82 Yen.

Earlier this week, the Bank of Japan announced a 2% inflation target supported by a commitment of open-ended asset purchases which would begin in 2013. Though considered a bold step to end economic stagnation, analysts and market players were disappointed that the asset purchase scheme would not be immediately implemented. A recent data release showed that Japan’s CPI fell 0.2% last month as compared to December 2011.

The Japanese currency was once again under pressure following Thursday’s media reports which said that Yasutoshi Nishimura, the deputy economy minister, emphasized that even a USD/JPY price of 100.00 Yen would not be cause for concern by the government. According to him, the government will begin to worry only if the U.S. Dollar ranges between 110 and 120 Yen will there be a concern that domestic import costs would escalate.