Yen rises de­spite cen­tral bank ac­tion

The Pak Banker - - Company+Boss News -

PARIS: The yen gained ground Mon­day against the dol­lar and the euro de­spite ac­tion by the Bank of Ja­pan to stem the rise of the cur­rency.

The dol­lar in mid-morn­ing deals was trad­ing at 84.85 yen, down from 85.19 on Fri­day, while the euro had slipped to 107.97 yen from 108.65.

The sin­gle cur­rency also fell to 1.2724 dol­lars from 1.2751 on Fri­day.

The rise in yen de­fied an an­nounce­ment by the Bank of Ja­pan that it would ex­tend a multi-bil­lion-dol­lar loan pro­gramme.

The de­ci­sion came af­ter an emer­gency meet­ing called in re­sponse to strong pres­sure from of­fi­cials to curb the yen's rise and sup­port an econ­omy mired in de­fla­tion. The unit hit a 15year high against the dol­lar last week.

In its sec­ond loan ex­pan­sion since March, the bank said it would of­fer 10 tril­lion yen (118 bil­lion dol­lars) in six-month low in­ter­est loans in ad­di­tion to 20 tril­lion yen from De­cem­ber's three-month loan scheme.

Do­mes­tic fi­nan­cial in­sti­tu­tions will there­fore be able to bor­row a to­tal of 30 tril­lion yen from the cen­tral bank for max­i­mum of six months against pooled col­lat­eral, at the rate of 0.1 per­cent.

The move would help lower in­ter­est rates in the mar­ket place with a view to eas­ing the yen's strength, said the bank, which left its key rate un­changed at 0.1 per­cent.

The ris­ing yen is seen as a threat to growth, rais­ing prices on Ja­panese ex­ports and re­duc­ing the com­pet­i­tive­ness of Ja­panese in­dus­try. The eco­nomic im­pact of the de­ci­sion will be "close to zero," Macquarie Bank econ­o­mist Richard Jer­ram told Dow Jones Newswires. "It's largely a cha­rade." -PB News

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