JPY Daily News

JPY Benefits as Major Banks are expected to Cut Interest Rates

The Japanese currency continues to remain relatively stronger than usual among the major currencies, which has a lot to do with the risk sentiment that the market is experiencing. The JPY reached a one-month high versus the Dollar as plunging equity prices prompted investors to reverse risky trades. The JPY performed its best against currencies of countries where central banks are expected to slash Interest Rates later this week, including the EUR, GBP, and the Australian and New Zealand dollars. In late New York trading, the Yen was up 2.4% against the Dollar at 93.18 and up 3.0% against the EUR at 117.59.

The JPY also benefits from the recently slumping stock market. If equities and other risky assets continue to take a hit, analysts state that the Yen could easily take its late-October highs and then continue gaining strength through early 2009. As the global economy slows, the Bank of England (BoE), the European Central Bank (ECB), the Reserve Bank of Australia and the Reserve Bank of New Zealand are all expected to cut rates by at least half a percentage point, diminishing the yield advantage of their currencies over the ultra-low yielding Yen. Japan has a benchmark Interest Rate of 0.30%, compared to 5.25% in Australia, 6.50% in New Zealand and 3.00% in the U.K. A global recession may make investing in higher-yielding overseas assets more risky for Japanese investors and will probably encourage domestic investors to bring back overseas earnings, this may then push the JPY up even further.

Current Time: 05/27 02:34 GMT

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#	Time	$€£¥	Event	Per.	Prev.	Fore.	Act.	Imp.
12/02
	05:34	JPY	Monetary Policy Statement		*	*	*
	05:34	JPY	Overnight Call Rate		0.30%	0.30%	0.30%
	07:06	JPY	BoJ Press Conference		*	*	*