Dollar drops against the yen

Concerns over the effect Japan’s policy of monetary easing might have on exchange rates has put the yen at centre stage. The Group of Seven has expressed concerns although Japan’s finance minister Taro Aso has assured that the Bank of Japan’s policies are aimed at devaluation and not the global exchange markets.

Since last November the yen has dropped nearly 20 per cent against the US dollar and new Prime Minister Shinzo Abe has vowed to implement severe measures to push the yen lower.

However, analysts are not expecting further monetary easing to be announced by the central bank until a new governor is in place.

The dollar is currently down to 93.23 yen, a loss of 0.3 per cent. The euro has also fallen to 125.50 yen, a drop of 0.5 per cent. Commodity currencies such as the Australian dollar made gains against the greenback. The Aussie settled at $1.0338, a rise of 0.3 per cent. The currency is still under pressure as the Reserve Bank of Australia mulls over rate cuts.

Industrial production figures coming out of Europe and US retail sales are currently the key focus for many investors as well as a meeting at the end of the week by the Group of 20.