G7 Momentary Bump in Yen Trend

The Japanese Yen firmed during the Asian session earlier following a sharp rise inspired by investors who cut their bearish holdings after one G7 official expressed the members’ concerns about the Yen’s recent movements. Since November, the Japanese Yen had depreciated almost 20% against its chief rival, the U.S. Dollar, with a similar erosion of its value against the Euro. That is as a result of the new Japanese government’s relentless quest to end the country’s prolonged period of deflation. Analysts say that in the long run, however, and despite any pronouncements by the G7 members, the Yen’s continued downtrend is inevitable.

As reported at 2:17 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 93.23 Yen, a loss of 0.3% from Tuesday’s trading and well off the 3-year peak struck on Monday when the pair touched 94.465 Yen. Japanese importers are said to be driving the Yen’s rise as they intend to buy the U.S. Dollar at around 93.00 Yen, or near Tuesday’s session low. The EUR/JPY pair dropped 0.5% to trade at 125.50 Yen, following a more than 100 pip all on Tuesday; just last Wednesday, the pair struck a 3-year high at 127.71 Yen.