Yen’s Fall Gets G7 Backing

The Japanese Yen slipped back from a recently struck 4½ year low versus the U.S. Dollar though additional deterioration is likely say currency analysts now that the G7 appears to have condoned the Bank of Japan’s monetary policy of aggressive easing as a statement issued by Britain’s George Osborne said only that the Group’s commitment to avoid targeting forex rates has been complied with. Only last week the USD/JPY pair breached the 100.00 level which it had flirted with for many, many weeks and has already broken through its not key resistance at 102.00 Yen. One forex strategist believes now that 100.00 Yen might now be the base from which the pair trade.

As reported at 9:22 a.m. (JST) in Tokyo, the USD/JPY pair was trading at a high of 102.15 Yen, a level not seen since the last quarter of 2008, before retreating to 101.87 Yen. Analysts are still attributing the Yen’s fall more to the strength of the greenback than the Bank of Japan’s efforts, and it is for that reason they say that it is tricky to presume just where the pair might eventually go. There is some consensus though that the 105 Yen level might prove too weak but others say that so long as the Japanese stock market continues to rally then the Yen’s depreciation might be allowed to resume further. Since late last year the Yen has lost 27% of its value against the greenback while over the same period the Japanese stock market has soared 71%.