Friday, February 17, 2006

Yen down as deflation persists

by Brian Turner

The Japanese yen was down in morning trade in Europe on Friday, as hints of continuing deflationary pressures outweighed news that the gross domestic product in Japan was up more than had been expected in the fourth quarter of 2005.

The Japanese GDP was up 1.4 percent in the last quarter of 2005, against an expected gain of 1.2 percent. This was equivalent to 5.5 percent growth on an annualized basis. The fourth-quarter figures put the full-year GDP growth at 2.8 percent. This was below the figure of 3.5 percent in the US but twice the eurozone GDP growth of 1.4 percent.

The indications that Japan has not come out of deflation included news that the GDP deflator, which is used to convert nominal growth to actual growth, went from -1.3 percent in the third quarter to -1.6 percent in the fourth quarter.

All this sent the yen down 1.1 percent to ¥118.64 in relation to the US dollar. The Japanese currency was also down 1 percent to ¥140.90 against the euro, while it fell 1.5 percent to ¥205.98 in relation to sterling, and declined by Won0.88 to Won8.1955 against the South Korean won.

 

 

 

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