JPY Daily News

Japanese Economy Faces Severe Depression in 2009

The Japanese currency, which has surged across the boards this year even as the economy slid into recession and Interest Rates were cut to near zero, has remained steady at 90.26 per Dollar yesterday, compared to 111.33 at the end of last year.

Despite recent JPY gains against most major currencies, economists predict that Japan's economy will probably shrink at an annual 12.1% pace this quarter, the sharpest drop since 1974, as its exports collapse. Economists expect negative growth will continue for a fifth straight quarter to the April-June period of 2009. Given the speed and the length of the contraction, this recession could be the most severe in the post-war era. This data has prompted other economists to revise their GDP projections.

The most severe financial crisis since the Great Depression is spreading from industrialized nations to developing markets, including Asia, the destination for about half of Japan's exports. Consumers at home are unlikely to pick up the slack, with household confidence at a record low and job prospects worsening. In light of these facts, it seems that the Japanese currency may reverse this year's gains against the USD in 2009. Some analysts predict that the Dollar will rise to 100 Yen by the end of next year.

Current Time: 05/27 01:41 GMT

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