The Japanese Yen continued to wither in strength, dropping to a fresh 5-year trough versus the U.S. Dollar during Monday’s Asian trading session, with total losses for the year now reaching more than 17%, suggesting that the combined efforts of the Japanese government’s monetary and fiscal policies have been successful at least in terms of the Yen’s depreciation. This session’s decline was attributed to a culmination of factors including the improved outlook for the global economy which helped to boost risk appetite, and expectation that the Japanese central bank will continue to ease further. Analysts point out that the absence of a crisis in the Eurozone is greatly adding to the positive outlook as is the fact that there is, for now at least, no political stalemate in the halls of the U.S. government.
As reported at 10:58 a.m. (JST) in Tokyo, the USD/JPY pair traded at 105.28 Yen, edging off its recently struck 5-year peak of 105.37 Yen, while the EUR/JPY is trading at 144.80 Yen, slipping from Friday’s peak of 145.675 Yen, also a fresh 5-year high. Meanwhile, the CHF/JPY traded at a 30-year peak above 118 Yen. The EUR/USD pair stood at $1.3765, slipping from Friday’s 2-year peak of $1.3894; the common currency has risen nearly 4.4% against the greenback and is poised to record its second consecutive year of gains.
Carry Trades Support Yen’s Outlook
The Bank of Japan’s commitment to keep interest rates at the existing low levels as well as to provide additional stimulus next year is encouraging the carry-trade crowd in which investors buy assets which are higher yielding using Yen borrowed at their current low interest rates.