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The Yen is losing weight

25.09.2015
72
On Friday, the USD/JPY currency pair is falling as it’s unable to resist the confidence the US Dollar has despite the fact that the statistics is very confusing.

The Japanese Yen is falling against the US Dollar on Friday. Judging by the market trends, traders are just unable to resist the fact that the confidence in the US Dollar is increasing. The unclear Japanese statistics has been taken into account, but maybe only a half of it.

Today’s data has showed that the core CPI in Japan in August decreased by 0.1%. This happened for the first time in 2 years and a half. Is it a problem? So far – no, but the signal is surely disturbing. In April 2013, Cabinet of Ministers of Shinzō Abe together with the Bank of Japan started massive economic stimulus programme, which helped the country to stop the deflation stage. In July 2015, the core inflation was zero, and now it’s in the red.

Right now, I wouldn’t say that this expensive economic stimulus programme was a failure. The programme isn’t finished yet and one minor signal says little in the long-term perspective. However, if the signal is confirmed by the data of September, the situation will be different. We remind that the consumer price index target in Japan is still 2% and the asset buyout programme is 80 trillion of Yens every year.  

By the way, the target is the USA and the Eurozone is the same.

All this reminds what happened last autumn. At that time, the inflation stopped sending positive signals as well and the BoJ had to increase the QE volumes. In fact, the rumors that the economic stimulus programme should be extended have been going for months. However, one should remember that any increase here will automatically lead to the increase of the national debt of Japan.

Akira Amari, Minister of State for Economic and Fiscal Policy of Japan, has noticed today that one shouldn’t be too pessimistic about the situation in the Japanese economy. And he is right in many respects. The Japanese government has done a lot over the past couple of years and this can not but yield the result. Yen’s retreat will give exporters a “leg-up” and that’s also a good point.
 
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