Currency News: Bank of Japan Weakens Yen While of Bank of England Struggles To Raise British Pound

Currency News

Bank of Japan Continues To Put Downward Pressure on Yen

Over the past week, the Bank of japan (BOJ) has continue to weaken the yen through a monetary policy of controlling japanese bond yields, instead of holding debt. As a result, the chief investment officer of Fidelity in Japan, expects the yen to continue to decline throughout 2017, to around 110-120 per dollar. “The BOJ’s policy is one that seeks to exploit the changes in the external factors,” said Maruyama at Fidelity’s Tokyo office last week. “Stopping the yen from strengthening is something that needs to be achieved on a medium- to long-term basis and that was impossible with the BOJ’s purchasing program, so the BOJ has committed to a yield objective, increasing sustainability. It is very logical.”

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The end result is that the BOJ hopes that this new approach will help strengthen consumer spending, and increase inflation in the country experiencing deflation. While domestic companies in Japan have been able to slightly increase prices on average, they still have a long way to go and the main factors will depend on global monetary policies and oil prices.

Pound Rises From Its Lowest Level After House of Lords Meeting

Though the BOJ is increasingly trying to lower its currency level, the UK needs to implement policies changes to help the falling pound recover as a result of Brexit.  Bank of England Governor Mark Carney was able to help the pound recover after his meeting with the House of Lords earlier this week. He had spoken about major consequences that may arise from Brexit, which gave rise for a tighter monetary policy in the UK. However, the pound’s decline is likely to continue as mounting political pressure Prime Minister May to create a better sustaining post-Brexit strategy has been increasing.

Currency news Furthermore, many analyst are more worried about political instability in Britain, more so than a change in monetary policy. A poll by Survation Ltd. on Tuesday showed that citizens in the UK are concerned with immigration control over access to the ‘single market’ in the EU. If the UK won’t be able to secure access or at least partial benefits from the ‘single market’, further capital outflows and a pound decline can be expected. 

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