JPY Daily News

Japanese GDP Data Increases Recession Fears

Japan's economy, only months ago, forecast to be the best performing among the world's most advanced nations, has now become the worst. Gross Domestic Product (GDP) shrunk an annualized 12.7% last quarter, the Cabinet Office said yesterday. Japan's government is struggling to cope with the economic crisis, and may expand its stimulus plans by 20 trillion Yen to 30 trillion Yen to fund a supplementary budget for the fiscal year starting April 1, 2009. The second blight on the Japanese economy is the surge in the Yen currency. The JPY has climbed 17% in the past year; in today's trading the currency was at 92.44 per USD.

As the global financial crisis deepened, investors reduced their carry trades, where they borrowed in low-yielding currencies to invest in nations where interest rates exceeded Japan's. Investors' focus is on whether the Bank of Japan (BOJ) will come out with specific policies to lower term rates. The BOJ has already cut its benchmark Rate to 0.1%, from 0.5% in October, in a bid to help spur the faltering economy. According to several analysts the BOJ policy-makers will likely keep borrowing costs unchanged on February 19th, leading the JPY to continue with its recent trends.

Current Time: 05/27 01:47 GMT

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