The Japanese Yen recovered during the Asian trading session following a plunge to a 6-month plus low versus the U.S. Dollar on Thursday. Speculators had been concerned that a new government in Japan might influence the Bank of Japan’s decision to lower their benchmark interest rates even below the near zero rate at which they currently stand. Analysts are divided as to the likely short-term outlook, with some believing that the 2% drop for the currency was merely an anomaly while others believe that it could turn into a longer term trend for sustained Yen weakness against its major rivals.
Earlier, the Prime Minister of Japan, Yoshihiko Noda, said that he was prepared to dissolve Japan’s lower Parliamentary house in order to pave the way for mid-December elections. The Liberal Democratic Party, which is the main opposition party, is seen as the likely successor and could adopt even a negative interest rate stance in order to encourage lending.
As reported at 1:11 p.m. (JST) in Tokyo, the USD/JPY pair was trading at 81.14 Japanese Yen, very much in line with New York trading overnight; on Thursday the pair rose to 81.46 Yen on the EBS trading platform, a level not seen since April.
Yen Recovers on BoJ Change Speculation
Barbara Zigah