Tuesday, February 7, 2006

Yen up sharply

by Brian Turner

The Japanese yen was up sharply on Tuesday as speculation rose that the Bank of Japan may be getting ready to tighten its monetary policy. The yen was up 0.8 percent in relation to the US dollar, to ¥118.03. It also rose 0.8 percent against the euro to ¥141.26, while it gained 1 percent to ¥205.85 in relation to sterling and was up 0.6 percent against the Australian dollar to ¥87.73. The yen also rallied in relation to the South Korean won after reaching a four year low against the South Korean currency earlier in the trading day.

The gains came ahead of a two-day meeting of the Bank of Japan’s monetary policy committee beginning on Wednesday. This will be the bank’s first meeting since news that Japan had two successive months of positive core inflation, the first time that has happened since 1998. This circumstance has prompted talk that if this incursion into positive inflation territory lasts for one more month, the bank will begin to tighten its monetary policy. Some analysts, however, hold that three months of positive inflation will not be enough to change the bank’s policy.

 

 

 

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