Today Yen declined against dollar and crossed 103.21 past highest low on 17th May and made a new low of 103.92 at 10.59 am in Indian market hour. Yen is depreciating since past 2 months from Octobers high of 97.42. Japanese currency declined due to Feds tapering and continuous monetary easing by Bank of Japan. However, we can also see the divergence in yields between Treasuries and Japanese bonds and approached the largest level since April 2011.
There is a wide impact of Yens weakness against Euro, as Euro reached 5 year high against yen, before ECBs vice president Vitor Constancios speech in Paris today. If we study past trends, Yen has declined against Euro during mid-may and also wavered further. At the end of September, it traded at the levels of 132-133 Yen against the Euro.
As per Bloomberg News, the Fed may begin to reduce its $85 billion monthly bond buying program on 17-18 Decembers FOMC meet. As we know the Bank of Japan has target of 2% Interest rate and to achieve the price stability the Bank of Japan may continue its monetary easing.
However, the market should closely look up at Fed Policy meeting held next week for tapering issue and Bank of Japans Policy meeting held at the same time.