The Japanese Yen struck a fresh multi-year low against the U.S. Dollar during the Asian trading session following the government’s call on the central bank to establish a new medium term inflationary target. The Bank of Japan’s policy setting group is preparing for January’s 2-day meeting to take place on next week and Prime Minister Shinzo Abe is stepping up his rhetoric to coerce the central bank to aggressively put in place monetary policy which could bring the Japanese economy back around. Abe wants the central bank to take on a 2% target for inflation as a medium term objective as opposed to a longer term one. Abe is also considering names for a suitable successor for the Bank of Japan’s governor who will be stepping down in April.
As reported at 2:17 p.m. (JST) in Tokyo, the USD/JPY pair was earlier trading on the EBS trading platform at a high on 89.67Yen, a level not seen in more than 2½ years. One forex strategist in Singapore says that the fiscal and monetary stimulus might be good for the economy and the Japanese stock market, but he doesn’t see any enduring support for the Japanese currency which is destined to trend lower.