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The Japanese Yen Rises as the Bank of Japan Holds Further Easing

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Nov. 2 2015, Published 3:41 p.m. ET

BoJ opts for no further increase in stimulus

The Japanese yen rose versus the US dollar on October 30, 2015, as the BoJ (Bank of Japan) kept rates unchanged at 0.1% and refrained from increasing the monetary stimulus, even as the slowdown in China and other emerging economies has been pulling the Japanese economy downward.

Sluggish growth in exports and weak household spending are expected to weigh on the central bank in the months ahead. BoJ Governor Haruhiko Kuroda extended the time required to meet the inflation target of 2%, blaming the bleak increase in oil prices for deflationary effects.

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The central bank last increased its quantitative easing program in October 2014 to the current levels of 80 trillion yen. The yen experienced positive pressures as a safe haven currency as geopolitical tensions increased between China and Japan earlier last week. To find out more about the appreciation of the yen, you can read Japanese Yen Rallies, Offsetting Lask Week’s Plunge.

Macroeconomic indicators release on sluggish note

Consumer inflation levels remained flat in September against a growth of 0.2% in August. On the other hand, the unemployment rate in September remained unchanged at 3.4% against the same level in August. Household spending shrank by 0.4% in September, well below the growth forecast of 1.2% and a rise of 2.9% compared to the previous month.

Impact on the market

The currency-based Guggenheim CurrencyShares Japanese Yen ETF (FXY) was trading 0.40% higher at the close of trade on October 30, 2015. In contrast, the iShares MSCI Japan (EWJ) fell 0.48%.

Japanese ADRs (American depositary receipts) on US exchanges were trading on a mixed note. Leisure goods maker Sony (SNE) rose 1.1%. In the banking arena, Mitsubishi UFJ Financial Group (MTU) rose by 0.15%, while Sumitomo Mitsui Financial Group (SMFG) fell by 0.62%.

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