BoE Report on Inflation Spurrs Yen’s Growth

The Japanese yen began to grow today, after a not very good Asian trading session, when the market participants began to react on the British central bank’s report on inflation and to favor the secure assets and currencies.

The report by the Bank of England released at the press conference today suggests that the gain in the consumer spending may be quite far in time at this moment. It was generally more pessimistic and failed to give traders some clue regarding the normalization of the global financial system. The whole report was summarized by saying: «The economy will eventually heal, but the process may be slow.»

The Japanese yen gained against the euro, the pound and reached the highest value against the U.S. dollar since April 28. The analysts say that the BoE turned out to be more bearish on the markets than the traders have expected. That fact buried many risk-hungry hopes and will probably cause a more prolonged correction of the high-yielding assets, including currencies that used to grow against the yen in carry trade during the previous years.

EUR/JPY fell from 131.43 to 130.78 as of 12:42 GMT today, that’s the third bearish day in a a row for this currency pair. GBP/JPY declined from 147.05 to 145.17, while USD/JPY went down from 96.33 to 95.85, trading not too far away from its 2-month low of 95.61.

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Indian Rupee Sells as Indian Elections End with Uncertainty

The Indian rupee declined against the U.S. dollar today showing the second bearish day as the country’s parliament elections aren’t easily predictable about the actual winner that will form the new government.

While India’s currency was the definite beneficiary of the recent uprise of the high-yielding assets it suffers greatly now from the double impact of the heightened global risk-aversion and the ongoing national elections. The rupee traded at as low as 50 per dollar level today for the first time in 2 months as the traders thought that the winning party will have to create a broad coalition with smaller parties in order to form a government. According to the latest news the current ruling coalition led by the may make it not much better than opposition lead by the Indian National Congress Bharatiya Janata Party.

The analysts believe that the elections add a layer of uncertainty to an already risky and hard-to-predict Indian market. The fundamental statistics from India suggest bad time for domestic companies and thus it has nothing bullish for the currency. We may see the continuation of the rupee’s weakening during the next few weeks.

USD/INR went up from 49.60 to 49.79 as of 9:22 GMT today. It was reaching as high as 50.06 during the Asian trading session.

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