The yen dropped, paring a two-day rally before the Bank of Japan reviews its inflation goal at a Jan. 21-22 meeting. Prime Minister Shinzo Abe has called for the target to be doubled to 2 percent and said he wants a new central-bank chief who can push through bold monetary policy as the government works to spur growth and defeat deflation. The current governor, Masaaki Shirakawa, is scheduled to step down in April.
“The market is waiting to see what measures are introduced next week,” said Antje Praefcke, a senior currency strategist in Frankfurt at Commerzbank AG. “We think that they have to deliver at their meeting and that, as well as the comments from Amari, are signs that yen is going to weaken.”
Economy Minister Amari told reporters today in Tokyo the yen is still correcting from excessive appreciation. He said Jan. 15 an excessively weak currency might hurt imports.
The yen will depreciate to 95 per dollar in the next six months, Praefcke predicted. It last traded at that level in August 2009, according to data compiled by Bloomberg.
The Japanese currency has found resistance this week at the 87.80-per-dollar level, which implies it now may continue weakening, Cilline Bain, a London-based technical analyst at Credit Suisse Group AG, wrote today in a client note. It might continue to decline through a support level at 89.67 and then to 90.84, Bain said, which would be its weakest since June 2010.
Resistance refers to an area on a chart where sell orders may be gathered, and support is where there may be buy orders.
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