Forex News
June 5, 2013 @ 9:08 am

Yen jumps after Abe’s new stimulus measures disappoint

The yen rose sharply on Wednesday, and Japanese equities tumbled after markets reacted negatively to Prime Minister Shinzo Abe’s new growth measures.

Investors were waiting to hear more bolder measures, like big cuts in corporate taes to spur investment.

Abe unveiled the so-called “third arrow” of measures to spur long-term economic growth in addition to measures of loose monetary policy to fight deflation.

USD/JPY plunged to as low as 99.37 in the Asian session, after initially rising to as high as 100.45 when Abe’s speech began. The yen climbed on safe haven demand as investors were disappointed that Abe’s plans fall short of expectations.

Japan’s Nikkei 225 Index tumbled 3.8 percent in volatile trading while Hong Kong’s Hang Seng Index was down 1.2 percent.

Abe’s blue print to revive the economy includes plans to allow public pension funds to buy more stocks and create special economic zones to spur foreign investment.

The stronger yen will affect Japanese exporters since their products will become more expensive.

Leading the decline in exporting companies were Toyota and Honda, with their stocks declining 3.4 and 2.5 percent respectively, while Sony and Sharp retreated 5 percent and 7.3 percent.

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