Go Finance Reporting in NEW YORK - The yen currency dropped sharply after touching its highest level four months ago on Monday. This happened after the Bank of Japan to take extraordinary steps to support the economy after the devastating earthquake and tsunami.
Reporting from the Associated Press, Tuesday (03/15/2011), Japan's central bank to print a new record by injecting funds amounting to 15 trillion yen into the financial markets to keep credit flowing in the economy remain. This was done to boost the production of an asset purchase program at 50-40 trillion yen.
Support is intended to raise the stock price, while the large supply of the yen helped to reduce the value of the currency. As for the yen against the dollar rose approximately 14 percent in the last 12 months, so have pressed the profitability of Japanese exporters and Japanese economic burden.
The crisis in Japan has made the yen rose sharply, in which investors hope the Japanese society and insurance companies buying back their local currencies to fund the reconstruction of the country, thus increasing the demand for yen.
Known, on Monday the dollar against the yen was recorded 81.65, down from last weekend's trade 81.88 per USD. In overnight trading, the dollar reached its lowest point at 80.64. This figure is the lowest level since early November, right after World War II that struck in 1995, which touched a low level of 79.75 per USD.
Analysts said that with this crisis, keeping the Japanese currency demand is higher. After another major quake in Japan, in 1995, the yen sinkhole approximately 20 per cent against the U.S. dollar in three months. (GoFinance)
BOJ has already expanded their QE program from 5 to 10 Trillion Yen (120billion), to have the scale of QE 2 in the US, they need to implement the full size 30 Trillion Yen. As the government already indebted up to 200% of GDP, they are treading a fine line going forward. Japanese corporate, government and individuals own up to 850 billion worth US Treasuries. If they need to dip into their savings for reconstruction. Keep an eye for the yield curve on US debts.
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