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The Japanese yen continues to appreciate against the dollar

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Foreign investment in Japanese stocks hit a deficit of 212.7 billion yen after recording a surplus of 228.7 billion yen, while foreign investment in bonds hit a surplus of 72.1 billion yen after recording a deficit of 1,063.2 billion yen.

USD/JPYThe Japanese yen strengthened against the US dollar last week, gaining 1.25 percent and posting gains for the fourth week in a row to close at 0.967300.

The yen was benefited by the recent weakening of the dollar, which lost 1.92 percent against a pack of its main rivals. Joe Biden’s victory was priced into the markets, boosting risk appetite now that the White House appears to be in Democratic hands while the Senate remains Republican.

The yen’s late appreciation concerns Japanese policymakers, highlighting the need to pay attention and understand how it could affect the performance of the Japanese economy.

Bank of Japan Governor Haruhiko Kuroda has already announced that with Biden’s victory, the bank will pay close attention to the foreign exchange market and that it will work with financial authorities to keep currency movements stable.

“It is extremely important to keep exchange rate movements stable,” he said.

The press also reported that a Japanese Finance Ministry official said the ministry would continue to monitor developments in the foreign exchange market.

On Monday last week, the Jibun Bank Manufacturing PMI was released, signaling a contraction in the sector at 48.7. That’s an improvement from the previous month’s number of 48 and higher than analysts’ expectations of 48.4.

The Bank of Japan published the minutes of its September meeting on Tuesday. Some Bank of Japan board members supported the idea of ​​continuing to work with the government. Members highlighted uncertainty about the consequences of the pandemic, as well as the magnitude of its domestic and overseas impact. They also agreed that tensions in global financial markets are easing, despite high volatility in equity markets of late.

Japan has so far reported 107,086 coronavirus cases and 1,812 deaths. Cases are multiplying in places such as Hokkaido Island and the city of Kanagawa Prefecture. To prevent the spread of the virus, the Japanese government is pushing Japanese citizens to avoid closed spaces, close contact environments and crowded places.

The bank also said the monetary base increased 16.3 percent year-on-year, after strengthening 14.3 percent in September.

The Department of the Interior and Communications reported on Thursday that overall spending on housing fell 10.2 percent, following a 6.9 percent drop in August. Operating cash earnings fell 0.9 percent after falling 1.3 percent in the previous month and beating analysts’ expectations for a 2.2 percent drop.

The Jibun Bank Services Purchasing Managers Index, published by Markit Economics, signaled a sector decline to 47.7, slower than the previous month’s reading of 46.9. Foreign investment in Japanese stocks hit a deficit of 212.7 billion yen after recording a surplus of 228.7 billion yen, while foreign investment in bonds hit a surplus of 72.1 billion yen after recording a deficit of 1,063.2 billion yen.

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