The yen advanced against all other major currencies today after the Bank of Japan announced a rate cut to a near-zero level and the investors ran from the risky assets into the Japanese and U.S. currencies.
The Bank of Japan reduced the target overnight rate from 0.3 percent to 0.1 percent at its meeting on December 19 and said that it will use the additional liquidity to help the domestic companies with their debt.
USD/JPY fell from 89.55 to 88.67 as of 9:16 GMT today. EUR/JPY went down from 127.79 to 124.80, while GBP/JPY declined from 134.65 to 133.14 and reached its lowest level since May 1995 at 132.53 today.
The recent rate cuts by the Federal Reserve and BoJ are the signals that the markets are more than troubled.
Central banks show that they are fighting with the crisis and the crisis is in the state which requires such measures. Investors in their turn decode this message as the signal to continue converting to «safe haven» assets. Result — the yen and the dollar are likely to continue appreciating.
The Bank of Japan reduced the target overnight rate from 0.3 percent to 0.1 percent at its meeting on December 19 and said that it will use the additional liquidity to help the domestic companies with their debt.
USD/JPY fell from 89.55 to 88.67 as of 9:16 GMT today. EUR/JPY went down from 127.79 to 124.80, while GBP/JPY declined from 134.65 to 133.14 and reached its lowest level since May 1995 at 132.53 today.
The recent rate cuts by the Federal Reserve and BoJ are the signals that the markets are more than troubled.
Central banks show that they are fighting with the crisis and the crisis is in the state which requires such measures. Investors in their turn decode this message as the signal to continue converting to «safe haven» assets. Result — the yen and the dollar are likely to continue appreciating.
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