Yen gains on PM comments

Yen gains on PM comments

Story link: Yen gains on PM comments

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The yen was up again on Monday in morning trade in Europe as the Japanese government sent signals that they might be closer to acquiescing to the Bank of Japan’s feeling that the time to begin tightening monetary policy might soon arrive. Despite recent statements from various government officials that deflation has not yet ended, prime minister Junichiro Koizumi said Monday that it is up to the Bank to decide what steps are appropriate. His comments echoed those of the Japanese economics minister on Sunday. Some analysts took these statements to mean that the Bank might well begin tightening policy at its March meeting, rather than waiting until April.

After gaining 1 percent in relation to the US dollar and 1.5 percent versus the euro last week, the Japanese currency was up another ¥0.7 on Monday morning to ¥116.14 in relation to the greenback, while it gained ¥0.85 to ¥137.75 versus the euro and added ¥1.65 to ¥202.13 against sterling.

The US dollar was at $1.1827 versus the euro at one point in the morning, an eight-week high, but it later backed off a bit to $1.1856 as traders awaited the release on Wednesday of new data on US core personal consumption expenditures, which the Federal Reserve’s favorite measure of inflation.

The New Zealand dollar was down again, losing a further 0.35 cents to the US dollar, to $0.6584 on news that New Zealand’s trade deficit had grown from NZ$317 million in December to NZ$935 million in January, when a deficit of NZ$402 million had been predicted.