Yen tumbles against dollar as Tokyo launches rescue plan
The yen fell to a four-year low against the dollar today as the Japanese central bank put its ambitious plan to double the ailing Far Eastern economy’s money supply into action.
The Bank of Japan conducted its first government bond-buying operation this morning, purchasing 1 trillion yen’s (£6.61 billion) worth of medium-dated debt and 200 billion yen of 10-year bonds. In response, the yen sank to its lowest level since 2008 against the dollar, touching 98.85 at one point in trading. The Nikkei 225 stock index also rose 3.1% to a five-year high, driven by gains for exporters, which stand to gain from a weaker yen.
Traders appear to have been taken by surprise at the speed with which the bank has moved to implement the plan it announced last week to inject the equivalent of $1.4 trillion into the Japanese economy.
“This has really shaken up many people’s attitudes toward the BOJ and the new government,” said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York. “It feels like it’s gathered a whole new momentum behind it, as the doubters have joined the bandwagon and it’s becoming a self-fulfilling prophecy.”
City analysts predicted that the dollar could soon break through the 100-yen mark.
Last week the new Tokyo central bank chief, Haruhiko Kuroda, announced his intention to double the Japanese money supply over the next two years in order to break a two-decade long run of stagnation and deflation in the world’s third-largest economy. Prime minister Shinzo Abe is complementing the work of the central bank with a fiscal stimulus funded by further government borrowing. The central bank’s quantitative easing helped to push the Japanese government’s 10-year bond yields down 2 basis points to just 0.52% in trading.
Traders expect the stimulus to encourage Japanese investors to pull money out of low-yielding domestic assets and invest in overseas assets, which should support equity and bond prices in Europe and America.
- 2 Italian police 'reveal' what Jesus looked like as a young boy
- 3 General Election 2015: 14-year-old boy asks Nick Clegg – 'can you kill Katie Hopkins?'
- 4 University student in court for allegedly covering housemates' food in window cleaner and spit
- 5 Ryan Gosling posts tribute to 'Ryan Gosling Won't Eat His Cereal' creator Ryan McHenry
Italian police 'reveal' what Jesus looked like as a young boy
Who should I vote for? The Independent quiz matches best political party for undecided voters ahead of the general election
Mysterious 'X-Files' sounds heard miles above the Earth
Garland shooting: Isis claims attack on Prophet Mohamed cartoon contest in Texas as its first action on US soil
Met Gala 2015: Beyoncé manages to out-skimp Rihanna, Miley and Kim Kardashian combined with near-naked ensemble
In defence of liberal democracy
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
iJobs Money & Business
£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...
£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...
£215 per day: Ashdown Group: Junior Project Manager (website, web application ...
£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...