JPY: Japanese Yen demonstrates its strength

At the Forex currency market the Japanese Yen rate is almost motionless on Tuesday amid new information about developments in the atomic power station in Japan.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY; however it moves along the signal line and does not give a clear signal. Stochastic Oscillator goes down in the neutral zone today and gives a pair buy signal.

Forex recommendations: there is a great possibility that bearish sales will resume for the pair with the targets of 81.20 and 80.60, which became a local bottom yesterday.

The situation remains tense in Japan: it became known today that radiation background near the atomic power station in Fukishima is at extremely high level due to the accident at the power generating unit caused by the earthquake and tsunami 

According to the information released today, Central Bank of Japan is going repurchase debt securities from the market in the amount of 2 trillion yen on 17-18 March. Closure of financial market due to stock market panic is not planned. In addition, starting from 22 March the bank of Japan intends to offer bonds to the market for 300 billion yen – received funds will be spent for reconstruction. 

The fact that Japanese companies have a well-developed network of foreign branches speaks in favor of the continued growth of the JPY: in the nearest future their overseas branches will allocate funds to their parent companies for restoration, which will support the Yen in the medium term 

Central Bank has already issued $87.5 billion to reassure stock markets where the panic started last week. Private Banks can count on this fund to issue short term loans. 

In addition, the regulator will allocate $220 billion to rebuild national economy, which has not been strong before, and recent developments will become extremely hard burden for it.

It became known last week that real revised level of GDP in Japan declined by 0.3% on quarterly basis (-1.3% y/y) in QIV against preliminary level of -0.3% q/q (-1.1% y/y).

Yesterday the Bank of Japan stated that interest rate will be kept in the minimum range of 0-0.1% per annum.

 

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