Yen Drops After Kuroda’s Speech

The Japanese yen fell against almost all major currencies as comments of the central bank’s chief resulted in speculations that monetary easing will remain in place for a long time and additional monetary stimulus is possible.

Bank of Japan Governor Haruhiko Kuroda was speaking in Tokyo today. He said in the speech that the central bank will keep quantitative and qualitative easing “as long as necessary” for reaching the 2 percent inflation target. Moreover, Kuroda stated that “if it is judged necessary for achieving the price stability target, the Bank will make adjustments without hesitation”.

The yen reached the lowest level since March against the euro, making market participants question how the European Central Bank react. ECB President Mario Draghi does not want to see the shared 18-nation currency strong and may act to bring down the exchange rate for EUR/JPY down, potentially resulting in a currency war between European and Japanese policy makers.

USD/JPY rose from 113.59 to 114.29 as of 6:21 GMT today, trading near the highest level since December 2007. EUR/JPY rallied from 142.51 to 143.26. GBP/JPY jumped from 181.75 to 182.46.

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