The dollar has climbed to over a 15-month high against the Japanese Yen on Wednesday, after Japan's incoming Prime Minister Shinzo Abe and his Liberal Democratic Party reached an agreement with coalition partner New Komeito Party on an economic policy package that includes setting an inflation target of 2 percent. The Bank of Japan currently maintains an inflation target of 1 percent.
The package reportedly calls for more stimulus to help the economy recover from its current slump. Abe and ally Natsuo Yamaguchi of New Komeito announced the accord in Tokyo yesterday.
A member of the Bank of Japan's policy board put forward a proposal for open-ended asset buying at the November meeting, minutes from the bank's policy review showed Wednesday.
The bank should "clearly present" in the statement that it would continue powerful monetary easing mainly through the virtually zero interest rate policy and the purchase of financial assets, "without setting any timeframe," until it achieved a CPI inflation rate of 1 percent, the member said during the policy board meeting held on November 19-20.
Another board member suggested that the abolishment of the payment of interest on excess reserve balances at BoJ would pose various problems, such as a decline in the functioning of financial markets.
"If such abolishment could bring down yields further on T-Bills in Japan, this might reduce the attractiveness of the yen as a safe-haven currency and exert influence on foreign exchange rates," the policymaker noted.
The dollar has risen to over a 15-month high of Y85.719 against the Yen on Wednesday. The U.S. currency has been on an upward trend against the Yen since December 10th, when it traded around the Y82.300 level.
Confidence among Japan's small scale businesses improved for the first time in nine months in December, data released by the Shoko Chukin Bank showed Wednesday. The small business confidence index increased to 43.8 in December from 43.3 in November. The index increased for the first time since March.
Equity markets across Europe have remained closed for the Christmas holiday on Wednesday.
The greenback weakened to a low of $1.3253 against the Euro Wednesday, but has since bounced back to around $1.3230.
Meanwhile, the buck has extended its recent gains against the pound sterling Wednesday, reaching over a one-week high of $1.6100.
Home prices in major U.S. metropolitan areas rose by a little more than economists had been expecting in the month of October, according to a report released by Standard & Poor's on Wednesday.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index rose by a seasonally adjusted 0.7 percent in October following a 0.4 percent increase in September. Economists had expected prices to increase by 0.5 percent.
by RTT Staff Writer
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