Yen Gains on New Tax Law

The Japanese currency extended its weekly gains today on speculations that Japanese investors are bringing overseas investments capital back to the country to profit from a new tax law, making the yen to climb further in an already pessimistic scenario.

Various factors provided support for the yen to gain for the third day in a row versus most of the 16 most traded currencies as today speculations indicated that last quarter’s GDP figures in the United States will indicate a deeper recession than in previous one, fact which is spurring demand for the relative safety of the Japanese currency. The pound also declined versus the yen as Japanese exporters are repatriating assets to the country to benefit from new tax regulations, even if the highest rise in home prices was posted today in the United Kingdom.

Analysts indicate that this week’s gains for the Japanese currency are very much related to new Chinese regulations approved in order to avoid further chaotic financial episodes in the country, but provoking side effects of pessimism in trading markets. Today’s quarterly U.S. GDP report is also causing market sentiment to have a bearish tone, since a longer recession in the U.S. would certainly rise risk aversion among traders, a yen positive factor.

GBP/JPY traded at 151.50 as of 10:46 GMT from a previous rate of 153.45 yesterday. EUR/JPY followed, from 134.51 to a current price of 133.52.

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