Japan’s Prime Minister, Shinzo Abe’s well known creed supports boosting of exports with the help of a weaker Yen and a very relaxed monetary policy. So far, a stimulus of ¥10.3 trillion has been injected into the economy for the purpose of creating 600,000 jobs and increasing the country's GDP by 2%.
Altogether, Japan has spent over ¥75 trillion to fund emergency programs that will help lift the economy out of its recent multi-year recession. The PM's latest proposal is to use the nation's foreign reserves to purchase bonds sold through the European Stability Mechanism. This will be used to pay for acquisitions and mergers involving Japanese companies overseas.
Across the Atlantic, Laiki Bank of Cyprus’ which is the second largest bank in the island-nation is set to wind up with immediate effect. All deposits less than EUR100,000 are to be moved to Bank of Cyprus (BoC) with an additional EUR9 billion to help it become a ‘good bank.’ Leftover accounts with over EUR100,000 will make a ‘bad bank’ that will be wound down gradually over time. Cyprus and its Troika lenders finally agreed not to impose levies on bank accounts.
However, big account deposits will forcefully incur large losses while the bank restructuring is in progress. Since a short term deal is now in place, it has greatly helped to settle jittery markets. However, another fear among investors and citizens is that this development has created a dangerous precedent that will likely be adopted by other financially troubled Eurozone countries in the future.
EurYen is currently on a downward move but a price reversal is expected soon. Buy if price drops to around 117.75 for a target back towards the 100 fib level at 119.73.
