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The Japanese Yen rate has weakened sharply at the Forex currency market on Friday due to the decision of the “Big Seven” about legality of the currency intervention by the Bank of Japan.

Forex forecast: MACD indicator is in the negative area for the pair USD/JPY and volumes are increasing. Stochastic Oscillator has reversed in the neutral zone today and is going up, giving a pair buy signal.

Forex recommendations: in case of breakdown at the level of 81.90 buyers’ targets will be the levels of 82.20 and 82.50.

So, countries of the “ Big Seven” agreed to start currency intervention together in order to ease pressure of the expensive Yen on the weak economy of Japan. Therefore, on 18 March authorities of the USA, Great Britain, Canada and ECB have joined the Bank of Japan- the intervention started at 9 am Tokyo time. Half an hour later the JPY collapsed by 3.1% in pairing the USD.

As representative of the Bank of Japan Noda said today, countries of B7 can conduct intervention, using the pair Euro/Yan. Currency intervention is not aimed at certain levels. 

The situation remains tense in Japan: it became known yesterday that radiation background near the atomic power station in Fukishima is at extremely high level due to the accident at the power generating unit caused by the earthquake and tsunami. The situation has not changed much by the mid-day on Wednesday; the threat of high radiation background is still there. 

It became known earlier that the Bank of Japan decided to pour Y3.5 trillion to the market to maintain liquidity level of one-day operations.

According to the information released on Tuesday, Central Bank of Japan is going to repurchase debt securities from the market in the amount of 2 trillion yen on 17-18 March. Closure of financial market due to stock market panic is not planned. In addition, starting from 22 March the Bank of Japan intends to offer bonds to the market in the amount of 300 billion yen – received funds will be spent for reconstruction. 

Central Bank has already infused $87.5 billion to reassure stock markets where the panic started last week. Private Banks can count on this fund to issue short term loans. 

In addition, the regulator will allocate $220 billion to rebuild national economy, which has not been strong before, and recent developments will become extremely hard burden for it.

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