The Japanese Yen has been struggling against the dollar, and it has now witnessed its lowest value in past seven months. The downfall is supposed to be the result of the monetary easing in Japan and positive talks in U. S. towards the solution of “fiscal cliff”. The Euro and other riskier currencies also gained in the process. The Euro’s gain is also due to the building up of positive atmosphere on the consensus on funding for Greece.
The Yen has been hit very severely as the elections have been declared for 16th December. The Opposition leader of LDP (Liberal Democratic Party) which is predicted to be the next ruling party has asked the Bank of Japan to come up with the printing of unlimited yen with set rates of zero or even less. Most Analysts, though predict that Bank of Japan would not come up with more monetary easing.
According to Joerg Asmussen, the European Central Bank’s policy maker, the Euro zone most probably will be agreeing on Greece funding for 2 years. Though, an opposition from International Monetary fund is expected. The IMF looks for a permanent solution to greece’s financial issues.
According to BMO’s Childe Freeman unless euro zone finance ministers come up with an agreement, the euro is unlikely to gain further. The Morgan Stanly analysts have suggested $1.2730 as the buying rate, $ 1.2650 as stopping rate and $ 1.33 as the target.
As far as tax hikes and spending cuts from the fiscal cliff are concerned, the U. S. leaders of Senate and house are positive that they would be very accommodating and compromising to resolve the issue.
Yen Falls against the Euro
The Yen has gone down again the Euro by 0.2%. The Euro had earlier gained a value of 104.15 against the yen. Still many analysts believe that the yen will improve its position after the worst per cent drop in last nine months. Over a long term though, keeping in mind the possible monetary easing in future, the yen may further lose its ground.
In such circumstances where there is element of uncertainty is involved and fluctuation in the yen – dollar ratio and the euro – yen ratio is very volatile, it is the right time for many investors to make use of the market situation and try to gain as much as possible form the market.