Yen Drops as Stocks Rallies on Hopes for Interest Rate Cuts
The Japanese yen weakened today as global stocks rallied on speculations that central banks of developed nations would cut interest rates to bolster slowing growth of their economies.
Most analysts agree that the European Central Bank would decrease its borrowing costs. The US Federal Reserve disappointed traders on its last policy meeting, refraining from a third round of quantitative easing, but the US economy continues to show signs of weakness and QE3 is still possible. The MSCI Asia Pacific Index of shares rose 0.8 percent on prospects of stronger economic growth that should follow an easing of monetary policies.
USD/JPY rose from 79.50 to 79.79 and EUR/JPY advanced from 99.99 to 100.24 as of 12:33 GMT today.
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