On January 27, 2009 in Tokyo, the Japanese Yen dropped against the Euro and the Pound Sterling as Tokyo shares surged following the Japanese government’s confirmation of a plan to inject more capital into the banking system, which is expected to assist companies hurt by the global financial crisis. The Japanese government’s plan is to initiate a $16.7 billion proposal to acquire shares in troubled companies.
The Japanese Yen had fallen yesterday after Barclays Bank, U.K. announced that it will record a pretax profit for 2008 and the housing data from the U.S. showed an increase in home sales. All these factors helped revitalize investors' appetite for risk.
The Euro rose by 0.8% versus the Japanese Yen and traded at 118.40 Yen, having risen to 118.91 Yen in earlier trading. The Pound Sterling climbed by 1.2% against the Japanese Yen and traded at 125.85 Yen, having rebounded from 118.80 Yen traded last week. The U.S. Dollar rose by 0.4% against the Japanese Yen and traded at 89.42 Yen. The Pound Sterling rose against the U.S. Dollar by 0.6% and traded at $1.4085.
Investors speculate that the Japanese Yen could continue to fall against the Euro and the Pound Sterling in the short term, particularly if equity markets continue to rise which point to more improvement in risk appetite.