Yen Down against the Euro on BOJ Pledge

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Tradervox.com (Dublin) The Japanese currency declined to its lowest point in three weeks against the euro after Deputy Governor Kikuo Iwata reiterated the Bank of Japan commitment to unprecedented monetary easing. The yen weakened against all its major peers as the BOJ is due to meet this week, and is expected to continue buying more than 7 trillion yen ($72 billion) in Japanese government bonds each month to end deflation. The euro traded near a two-year high against the dollar before the Federal Reserve begins a two-day meeting tomorrow, with economists predicting policy makers will refrain from tapering stimulus. The Australian and New Zealand dollars gained.

According to Derek Mumford, a Sydney-based director of foreign exchange at Richford Capital, the Bank of Japan, the Fed and the Bank of England are effectively printing money while the ECB is refraining from this practice, hence the euro will continue to strengthen against the yen.

The yen declined 0.2 percent to 134.75 per euro as of 12:12 p.m. in Tokyo from Oct. 25, extending a 0.5 percent drop from last week. It fell 0.2 percent to 97.59 per dollar. The shared currency was little changed at $1.3808, after reaching $1.3832 on Oct. 25, the strongest since November 2011.

The BOJ will continue to buy bonds until it achieves its 2 percent inflation target, Deputy Governor Iwata said yesterday in Shimonoseki, western Japan. The country’s monetary and fiscal policies are at a critical point for ending deflation, he said. Policy makers hold a one-day meeting on Oct. 31.

Japan’s Prime Minister Shinzo Abe is attempting to revitalize the nation’s economy through a program of monetary easing, fiscal stimulus, and structural reforms -- the so-called three arrows of Abenomics.

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