Mixed outlook for Yen

The IMF recently released a much-anticipated report on Japan's economic prospects. The report was overwhelmingly positive, forecasting growth of 1.8%, compared to 2.4% last year. At the moment, inflation appears to be negative, meaning Japan’s Central Bank is not likely to raise interest rates anytime soon. On the political front, Prime Minister Koizumi has failed in his quest to privatize Japan Post, despite drawing wide international praise for his efforts. As a result, Koizumi has called for a snap election to be held in the not-too-distant future. The implications vis-à-vis the Japanese Yen are ambiguous. While Japan’s economic future is bright, its political future is uncertain. Stuff New Zealand reports:

Some directors said intervention could be a last resort if the yen rose high enough to threaten the economy while most others said the economy was in better shape to handle a stronger currency, which can make it tougher for a country's exporters to compete.

Read More: IMF gives Japan's economy short-term tick