As G20 Looms, Dollar Slips

The U.S. Dollar slipped versus the Japanese Yen during Monday’s Asian trading session after the release of a report which said that the U.S. would ensure that the Japanese government through its central bank did not intentionally allow its currency to depreciate. That would be in line with the commitment that Japan had made to the G20 in February, essentially allowing market forces to dictate currency direction. That, of course, is now in opposition to the sentiments expressed by the new Japanese central bank governor who pointed out recently that they will do whatever it takes to put a halt to the country’s prolonged deflationary cycle.

As reported at 11:57 a.m. (JST) in Tokyo, the USD/JPY pair was trading lower at 98.36 Yen, well off of the 4-year high of 99.95 Yen which was struck on Thursday. Analysts don’t believe that the U.S. government’s position is likely to derail the Yen’s longer term downtrend, however, though it may have temporarily postponed the 100.00 level that market players had been anxious to see. With a G20 meeting scheduled to begin on Friday, currency analysts don’t foresee any strong rebound of the greenback against the Japanese Yen, and are counting instead on a market correction and a buying opportunity.