Yen drops as stimulus measures predicted in Japan

The yen has dropped against a number of other major currencies as expectations are that Japan will pursue aggressive stimulus measures to kick start the economy if Shinzo Abe, leader of the opposition, becomes the next prime minister. The US dollar rose 0.18 per cent against the yen to end at 81.82.

Earlier in the week the Bank of Japan agreed to continue with an asset purchasing plan worth 91 trillion yen. The Bank also said it would be keeping interest rates at 0.10 per cent. The yen is at its lowest level against the dollar for seven months as analysts predict that looser monetary policies are around the corner.

In the US, Congress and the White House are currently trying to agree on a way to avoid an approaching fiscal cliff. Federal Reserve chairman Ben Bernanke has called upon the Obama administration and Congress to do everything to avoid a combination of hikes in tax and spending cuts that could potentially push the country into recession.

Government reports are also due on oil inventories and jobless numbers earlier than usual this week because of the Thanksgiving holiday. Figures released for October show that housing starts were up by 3.6 per cent and building permits dropped 2.7 per cent during the month.

The euro has risen against the yen by 0.16 per cent to settle at 104.85. The pound has also made a 0.18 per cent gain against the Japanese currency to end at 130.32.