Japanese Yen gains Ground in Advance of E.U. Plan

Today, ahead of measures expected to be implemented by E.U. central bank ministers to stimulate the global economies, risk aversion helped prop up the Japanese Yen, which saw some gains against higher yielding currencies such as the Euro, even while European share prices continued to struggle. 

Later today, a representative of the E.U. will provide details of a stimulus plan for the E.U. countries, which is expected to amount to approximately 130 Billion Euros.  Unfortunately, analysts doubt that the effort will have much effect in boosting the struggling Euro.

Although the Japanese Yen had lost some earlier ground upon the announcement by Chinese officials of the largest rate cut in a decade, it nonetheless continued to be supported versus the Euro and the U.S. Dollar.  Central bank officials in China announced that their 1 year deposit and lending rate would be reduced by 108 bp.

According to Tullett Prebon Group of 7 market economist, Lena Komileva, the rate cut in China will emphasize the importance of a globally coordinated effort to counteract the risks to the world’s economies.  This emphasis will likely reduce the attraction of the Japanese currency as a safe haven.

In early trading, the Euro lost .7% to 123.55, and the U.S. Dollar dropped .2% to 95.02 Yen.  Versus the U.S. Dollar, the Euro lost .50%, trading at $1.2958.