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Tuesday 02nd of December 2008
July 12, 2006

Yen weakens ahead of Bank of Japan meeting


by Elaine Frei

The US dollar strengthened on Wednesday, helped by the news that May’s trade deficit was not as large as had been expected. While May’s deficit was half a million dollars more than April’s figure, at $63.8 billion it was lower than the $64.9 billion that had been predicted by analysts. The lower number was due to an upturn in exports from the US.

The greenback added 0.4 percent to $1.2706 in relation to the euro, while it was up 0.5 percent to $1.8346 against sterling, 0.6 percent higher versus the Swiss franc at SFr1.2341. The US currency gained 1 percent against the Japanese yen to ¥115.42.

The yen dropped in relation to other currencies as well as investors were hesitant ahead of Friday’s meeting of the Bank of Japan. While most analysts expect that the Bank will abandon zero interest rates at the meeting, the Japanese finance minister was quoted as saying that deflation had not been defeated yet and that the Bank should not yet move away from zero interest rates.

The yen dropped 0.5 percent to ¥146.62 versus the euro, while it was down 0.8 percent to Won8.2162 in relation to the South Korean won. The Japanese currency fell 1.1 percent to ¥86.87 versus the Australian dollar.

Higher unemployment figures in the UK sent sterling 0.1 percent lower against the euro, to £0.6927. Unemployment is now at its highest level in four and a half years in the UK.

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