Minister’s Comments Push Yen Higher

The Japanese Yen firmed against its major rivals as traders unwound their sell positions following comments made by Akira Amari, the Japanese Economics Minister, who said that the Yen’s excessive and prolonged weakness was likely to raise the price of imported goods and could hurt some people’s livelihoods. The Japanese currency had been poised to record is largest single day’s gains against the greenback following those remarks; as reported at 12:11 p.m. (JST) in Tokyo, the USD/JPY pair dropped from a 2½ year peak as a result, falling to 88.28 Yen at one point before recovering to 88.80 Yen. The EUR/JPY pair also fell from a 20-month high, dropping to 118.09 Yen from 120.13 Yen.

Market players have been building up short positions in the Japanese Yen on growing expectations that the central bank will be coerced into more aggressive monetary policy steps by the new Japanese government. The Prime Minister has repeatedly said that the Bank of Japan’s primary goal should be to resurrect Japan’s sluggish economy by tackling deflation head on. Analysts don’t expect that the Yen’s pullback will be enduring and anticipate that market players will resume their bearish positions once the rally peters out, given Shinzo Abe’s government’s commitment to restoring the Japanese economy to good health.