THE DAILY CHART: Japan's currency craving

The Bank of Japan has finally had enough of the Yen's seemingly endless rise and announced a cut in interest rates, but by the end of the overnight session the Japanese currency had actually gained ground against the greenback. The problem for the BOJ is that interest rates were already at 0.1 per cent and they've been symbolically cut to between zero and 0.1 per cent. With more signs emerging from the US Federal Reserve that another round of quantitative easing is on the cards, investors dumped the US dollar for just about anything, including the Yen.



Predictably, the Bank of Japan promised to keep interest rates as low as possible until deflation is defeated, but surprisingly it announced its own round of quantitative easing. The BOJ has pledged to purchase ¥5 trillion ($US60 billion), but it's nothing compared to the $US1 trillion program being thrown around at the Fed. It may be that the only way for the Yen to depreciate in any meaningful way will be for it to lose its safe-haven status. Given Japan's huge debt levels, limited stimulus options, ageing population and struggling manufacturing sector, that mightn't be such a big ask.