The yen seems set for a fourth monthly gain against the US dollar this morning, with continuing concern over the likely direction of the global economy pushing investors towards the safe haven of the Japanese currency.
Currency strategists at Ueda Harlow in Tokyo commented that the yen was likely 'to draw buying interest' as appetite for risk remains in short supply. The announcement yesterday that the Bank of Japan (BoJ) would expand a bank-loan programme by $118 billion dollars (¥10 trillion) was deemed 'too little and too late' by Noboyuki Nakahara, a former board member of the Japanese central bank. Nakahara said that the announcement was meaningless and would not be enough to halt the yen's advance. He added that sustained economic growth was impossible for Japan unless exporters regained strength, and called for a reduction in the BoJ's policy rate to zero per cent, as well as outright bond purchases worth ¥500 billion. Current BoJ governor Shirakawa hit back, saying that the bank would not rule out any policy actions, but that it must consider the 'adverse effects' of lowering the policy rate of interest.
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