September 30th 2005
Bank of Japan to end monetary tightening
The Japanese Yen has not performed well against most currencies so far this year. Recently, however, the Japanese economy has shown signs of life and the Japanese government now seems committed to making certain structural reforms, which should further spur growth. In response, the Bank of Japan has hinted that as soon as it can be validated that the economy is on solid footing, it will begin raising interest rates, ending a period of negative real interest rates. This, in turn, should stem the Yen’s decline against the USD. Forexnews.com reports:
Looking forward, the looming end of the Bank of Japan’s quantitative easing by Q1 2006 coupled with and an eventual subsequent yuan revaluation against the US dollar, explains our medium-term yen bullish position, with 108 by year-end and 103 by end of Q1.
Read More: How Much More for the Yen?
