Japanese stock prices have risen approximately 20 percent in the past two months as the country’s currency has weakened consistently. The Nikkei 225 gained for a second day, rising 0.7 percent to a 10,652.64 close. These occurrences stem directly from fears of inflation in Japan, as well as an anticipated period of monetary easing. Prime Minister Shinzo Abe has pressured the Bank of Japan to embrace a higher inflation target, and to accept a strong monetary easing policy.
The yen plummeted to 88.15 yen to the dollar, losing 0.3 percent and nearing a 2 ½ year low that was hit last Friday. An upcoming Bank of Japan policy meeting could cause further volatility for the already struggling currency. The dollar has risen nearly 12 percent against the yen since November. The yen also fell against the Australian dollar to a four year low, and is trading around 93.03 yen per Aussie.
In other news, the dollar rose to $1.3043 euro, and the British pound neared a six week low against the dollar yesterday, following speculation that the Bank of England may adopt a monetary easing policy.