Example 2 Forex Currency

 

Currencies: USD/JPY -

 

This past week, the Japanese government announced a plan aimed at weakening its currency, without directly intervening. The Japanese government has already stepped in three times to try and weaken the yen, which has risen some 6% against the dollar from the start of the year.



In March, the yen hit a record high against the dollar, breaking through 80 yen for the first time since 1995. In early trading Wednesday, the yen was modestly higher against the dollar at 76.56.


Experts think the government may have to do more to really make an impact. Japan's currency plan follows an announcement by Moody's that it was downgrading the Japanese government's credit rating to Aa3 from Aa2 with a stable outlook. This sent the Japanese Nikkei down about 1%. The rating agency said the downgrade was also prompted by the growth of Japan's debt-to-GDP ratio. Moody's blamed the earthquake-tsunami disaster for the economic issues Japan is experiencing.