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Japanese Yen Strengthens as BoJ Keeps Monetary Policy Unchanged

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Nov. 20 2015, Updated 7:14 a.m. ET

Japanese yen strengthens by close to 0.6%

The US dollar to Japanese yen currency pair, inversely related to the yen, fell by 0.59% on November 19, 2015. The fall in the currency pair was majorly attributed to the trade balance data released from Japan as well as the BoJ’s ( Bank of Japan) monetary policy. The markets also experienced profit taking in the US dollar, further compounding the fall of the currency pair. The pair fell to a low of 122.60, before closing the day at 122.90.

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Bank of Japan and balance of trade

The Japanese balance of trade for the month of October was released on November 19, 2015, at a surplus of 111.5 billion yen. The fall of 13.4% in imports was partially offset by a fall of 2.1% in exports, resulting in a trade surplus for the first time in nearly six months. The fall in exports mainly fell due to the weak demand from the Asian region.

The BoJ has held its monetary policy steady since October 2014 and continued to do so. The central bank was of the view that the Japanese economy has continued to recover at a moderate pace. The BoJ reiterated its commitment to achieving the price stability target of 2%.

Impact on the market

The currency-based Guggenheim CurrencyShares Japanese Yen ETF (FXY) was trading 0.57% higher at the close of trade on November 19, 2015. In contrast, the iShares MSCI Japan Index (EWJ) remained nearly flat.

Japanese ADRs (American depositary receipts) on US exchanges were trading on a mixed note. Leisure goods maker Sony (SNE) fell by 0.48%. In the banking arena, Mitsubishi UFJ Financial (MTU) fell by 0.15%, while Sumitomo Mitsui Financial (SMFG) rose by 0.37%.

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