Japan: Japanese yen continues to rise in October, prompting further monetary easing
October 28, 2011
The yen resumed its rally and reached a record high of 75.9 on 26 October, following significant appreciation in the months following the 11 March disaster. On 28 October, the Japanese yen (JPY) traded at 76.0 per USD, which represented a 0.7% appreciation over the previous month. Meanwhile, on a year-on-year basis, the yen appreciated a nominal 6.6%, which represents its strongest level in more than 50 years. Given the strong appreciation of the yen, the Bank of Japan (BoJ) decided on 27 October to expand the total size of the Asset Purchase Program by about JPY 5 trillion (USD 66 billion), thereby raising the total program to around JPY 50 trillion. The BoJ will use the extra funds to buy government bonds in an attempt to curb the yen's appreciation. The JPY has risen sharply in the last months, as investors shift assets to a safe haven amid rising global uncertainties and the Federal Reserve's policy of bringing down long-term interest rates. The Bank also decided to leave the collateralized overnight call rate unchanged at around 0 to 0.1%.