Yen rebounds against dollar

Published: 21 Jan at 7 AM Tags: Euro, Dollar,

An announcement by the Bank of Japan that it will not be increasing its bond-buying programme saw the yen bounce back against the dollar. Because of the current slump in the price of oil the central bank also dropped its inflation forecast from 1.7 per cent to 1.0 per cent.

After pushing as high as 118.87 yen ahead of expectations that the BoJ would introduce further easing, the dollar slipped to 117.76 yen, a loss of 0.9 per cent. The euro has also fallen 0.7 per cent to 136.17 yen. The single currency recently hit a three-month trough of 134.70.

However it is likely that the BoJ will introduce further easing in the near future after it dropped its CPI forecast for 2015. Investors will now be focusing on the European Central Bank and the likely introduction of a sovereign bond-purchasing programme in an attempt to kick-start growth in the eurozone.

The euro is currently languishing not far off last week’s 11-year low of $1.14595 at $1.1570.

In New Zealand a slowdown in annual inflation to 0.8 per cent saw the kiwi drop to $0.7628. Expectations of positive labour data coming out of the UK saw the pound make solid gains. Sterling last traded at $1.5163.