U.S. dollar is surging versus the yen
Bank of Japan has eased the inflation target from 1% to 2% after government demands and most likely will add to the asset buying program. This is the Japanese version of Operation Twist to reinflate the stagnant economy. The net result is a lower yen versus the U.S. dollar and other major currencies. This should help the major exporters like Sony and the Japanese automobile industry.
Are we entering a new period of currency “wars”? Both the ECB and the Federal Reserve have implemented variations of quantitative easing to reinflate stagnant economies. Exporting nations cannot tolerate a rising currency as they try to revive stagnant economies. For example, the euro is already in an intermediate uptrend versus other major currencies and this will not be welcomed by a major exporter like Germany. Relative to other euro zone countries, the German export oriented economy prospered in part due to the weak euro.
Relevant articles picked from the Web:
- Bank of Japan makes biggest push in decades to jump-start economy — FP — January 22, 2013
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