Last update: Thu, 28 Jul 2016 11pm

Money and Banking: World


The Japanese yen weakened against the dollar on Wednesday after Japan's prime minister unveiled a surprisingly large $265 billion stimulus package to reflate the world's third-largest economy, and before the Federal Reserve was due to make a statement on its two-day meeting. The size of the Japanese package, at more than 28 trillion yen ($265.30 billion), exceeded initial estimates of around 20 trillion yen.
The Japanese yen reached more than one-week highs against the US dollar on Tuesday as traders reduced expectations of how much new stimulus authorities will inject into Japan's ailing economy. Most economists surveyed by Reuters expect the Bank of Japan to expand its asset purchases and cut rates further below zero at a two-day meeting that ends on Friday.
Sterling edged down against the dollar and euro on Wednesday, refusing to be lifted by second-quarter UK growth data that was stronger than had been expected, though backward-looking. Britain's economy grew by 0.6 percent during a second quarter that ended with a vote to leave the European Union, up from 0.4 percent in the first three months of 2016.
Signs of a larger than previously expected fiscal stimulus plan for Japan had the yen back on the defensive on Wednesday, as investors bet the Bank of Japan (BoJ) would match that with a new bout of money-printing aimed at weakening its currency. Yen volatility has neared record highs in the past month on speculation, repeatedly denied by officials, that the BoJ will take the next step in eight years of emergency policymaking by handing money directly to the government with no strings attached.
Interbank buy/sell rates for the taka against the dollar on Wednesday. 78.40-78.40 (previous 78.40-78.40).
Most emerging Asian currencies rose slightly in volatile trade on Wednesday, ahead of central banks meetings in the United States and Japan, as well as expectations of massive economic stimulus from Tokyo. The Indonesian rupiah led regional gains as local stocks and bonds rose as President Joko Widodo appointed World Bank managing director Sri Mulyani Indrawati the country's new finance minister. The appointment raised hopes of further improvement in the country's fiscal position.
The yen fell on Wednesday, pressured by expectations of further monetary easing by the Bank of Japan and amid media reports that the Japanese government will soon unveil a $265 billion stimulus package. Trading in the yen was choppy, with traders taking cues from various headlines regarding Japan's economic stimulus package. The yen fell after Japan's Fuji TV said Prime Minister Shinzo Abe was planning to announce a stimulus package with a headline figure of around 27 trillion yen.