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JPY Daily News
JPY's Excessive Volatility Ending as Japan Considers Cutting Interest Rates
As the market's speculation increases that the Bank of Japan (BoJ) will lower its interest rates, the Yen fell for a second day against its currency counterparts, extending its largest ever decline. The first motivation for a potential rate cut is to stem the Yen's appreciation; another motivation is to try to prop up the economy.
Yesterday, Japan's currency dropped 0.5% versus the pound to 156.47 on speculation investors will revive carry trades. In carry trades, investors borrow in currencies with low interest rates and invest in currencies with a higher yield. Japan's target rate of 0.5% is the lowest among major economies. The potential BoJ rate cut led to an unwinding of safe-haven flows to the JPY. Perhaps what has been driving the Yen to its recent strength is not speculation, but the repatriation of Japanese investors and de-leveraging by global investors.
The Group of Seven (G7) issued an unscheduled statement on Oct. 27 saying it was concerned about "the recent excessive volatility" in the JPY. The Japanese government has also stated that it may intervene in foreign exchange markets by arranging purchases and sales of currencies, if necessary.
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Print| # | Time | $€£¥ | Event | Per. | Prev. | Fore. | Act. | Imp. |
|---|---|---|---|---|---|---|---|---|
| 10/30 | ||||||||
| 23:15 | JPY |  Manufacturing PMI | 44.3 | * | 42.2 |  | ||
| 23:30 | JPY | Household Spending | y/y | -4.0% | -3.9% | -2.3% |  | |
| 23:30 | JPY | Tokyo Core CPI | y/y | 1.7% | 1.5% | 1.5% | | |
| 23:30 | JPY | National Core CPI | y/y | 2.4% | 2.3% | 2.3% | | |
| 23:30 | JPY | Unemployment Rate | 4.2% | 4.2% | 4.0% | | ||
