Japanese Yen Gains Market Strength with the Chinese Property Attempts to Curb Hit Equities

After recording several plunges recently, finally the Japanese currency yen is seen gaining some strength in the market, all because of the Chinese decision to curb the mainland properties. This Chinese strong curb has been considered by many investors as an encouraging move to create a sell-off in Asian equities. On the other hand, the Australian dollar recorded its eight-month low following the Beijing’s move. The Australian currency reached to its lowest level since mid-July, reaching at as $1.0117.

The Beijing’s announcement of bringing more stringent measures to control the property market in China came on Friday and which caused the Shanghai Composite index to fall down by 3.2 percent. China is supposed to incorporate these tightening measures in order to keep a tab on the rising housing costs, but the market took it as a signal of a future sell-off the Asian equities. Consequently, the weakening yen rises a little in the currency market.

The Australian dollar fell against the yen by 0.8 percent reaching to 94.60 yen. Traditionally, the yen has long been considered as a safe currency for investment. But the news of the aggressive monetary easing policy being implemented by the Japanese central bank caused the currency to tumble in the market. But now the currency regaining its market strength, it’s expected that investor will again return to the currency and will start investing in it. The yen is now being seen getting an edge over all major currencies with the US dollar recording a fall of 0.2 percent reaching at 93.43 yen.  Euro is also reported to slide against the dollar.

However, the market players are still susceptible about the Chinese move whether it could bring a desired risk-off that numerous investors are positive about. Global market analysts feel that things are not actually that good that it may appear to the investors, particularly when the Australian dollar and other emerging Asian currencies are going weak in the market.

The last week’s release of the Chinese manufacturing data only surprised the market players bringing unexpected movements in the market and the latest Chinese move on the property sector is also creating an ambiguous market environment, leaving numerous investors in a situation of uncertainty where they would be unable to make any sensible business decision. Most analysts are concerned about the flow of the funds that are supposed to move across the Chinese economy.

In the meantime, the Japanese government nominates Haruhiko Kuroda as the next Bank of Japan (BOJ) governor. Kuroda, during a confirmation hearing in the Japanese parliament, stresses upon the need of purchasing the longer-dated bonds of the government to ease the monetary policy. But at the same time, he urged the central bankers to monitor the side-effects.  However, the yen remains undeterred by the remarks of Kuroda and shows no reaction. But several traders are surprised by his remarks and which may have some side-effects on the future movement of the currency. Still many traders are not disappointed by Kuroda’s statement, and the expectations are somehow high with respect to yen’s positive market movements.

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