Yen weakens

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IOL world currency1 Graphic: Renjith Krishnan.

The yen fell Tuesday as the dollar-euro exchange rate barely budged, with traders awaiting more concrete signals on both sides of the Atlantic on where the economies are headed.

At 23:00 SA time the euro was trading at $1.2401, slightly above late Monday's $1.2399.

Both pushed higher against the yen: the dollar rose to 78.59 yen from 78.20, while the euro moved to 97.48 yen from 96.97.

“Increasing political uncertainty may send JPY (the yen) lower in the near future,” said analysts at Nomura.

“The major opposition party, the LDP (Liberal Democratic Party), may submit a no-confidence motion and a censure motion soon, if the ruling party, the DPJ (Democratic Party of Japan), does not promise to hold an early general election.

“As a result, we think the risk of a further downgrade by the rating agencies is now rising again.

“In addition, if the general election is held this fall, the LDP, which advocates a higher inflation target of 2.0 percent, is likely to be the first party, increasing expectations of a more aggressive Bank of Japan easing.”

The British pound edged higher to $1.5622 from $1.5600 Tuesday; the Swiss franc was flat at 0.9686 francs to $1.00 and 1.2012

francs to the euro. - Sapa-AFP

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