Yutaka Harada, the newest board member on the Bank of Japan’s policy committee, said that the Yen has finally arrived at a “pretty good place” given the recent declines. To analysts, that suggests that the BOJ might not allow the Yen to further depreciate beyond the 125 level that was hit earlier this week, a 12½ year trough. According to Harada in a recent interview, the several benefits of a weaker Japanese Yen more than offset any potential demerits given that it increases exports, corporate earnings and promotes job creation.
As reported at 9:06 am (BDT) in London, the USD/JPY was trading lower at 124.0880 Yen, with today’s trading range at a low of 123.7750 Yen and a high of 124.5705 Yen. The EUR/JPY was higher at 140.8700 Yen, primarily a factor of the Euro’s broad rally on the back of an increase in yields on German bunds.
Yen’s Decline Steep since QE Began
Since last 2012, the Japanese currency has lost nearly 37% of its value relative to the US Dollar; that was when Shinzo Abe, Japan’s Prime Minister, pledged to put an end to a too strong Yen that presented a hefty burden to Japanese exporters. Since then, the BOJ has launched a massive campaign to weaken the Yen through quantitative easing, the purchases of large amounts of sovereign debt which would, theoretically, help to boost inflation toward the BOJ’s 2% target.