Yen rises due to uncertainty in Tokyo

The yen is up against the US dollar as analysts remain uncertain about just how aggressive the Japanese government will be in easing monetary policy. The greenback hit 93.55 yen on Wednesday, a fall of 0.1 per cent. The market is expecting the recent decline of the Japanese currency to slow as doubts remain as to whether the Bank of Japan will go ahead with plans to soak up foreign bonds.

A recent G20 meeting signalled that competitive devaluation would not be an option and fell short of accusing Tokyo of depreciating the yen in order to manipulate currencies. Taro Aso, the Japanese Finance Minister, said that buying foreign bonds was not currently being considered just a day after Prime Minister Shinzo Abe suggested it might be.

Analysts are also looking at who will be chosen to replace the current governor of the Bank of Japan after Masaaki Shirakawa leaves.

It was widely assumed that Abe would replace the outgoing leader with someone more amenable to his policy of driving the yen down to improve the price of exports. However, there appears to be some friction with the finance minister.

German economic sentiment has improved and pushed the euro up to $1.3413, a hike of 0.2 per cent. The single currency has also risen to 125.39 yen, an increase of 0.1 per cent.