KTC Capital Short Yen Fund Climbs with Japanese Rate Cut

London, UK (I-Newswire) October 28, 2010 - While the rate reduction seemed insignificant (the cut was a rate range between 0% and 0.1% from 0.1%), it signaled Japan’s loss of confidence in its monetary easing policy to date. This signal enacted traders to put pressure on the yen almost immediately. The Bank of Japan said the move was due to the slowdown in the pace of Japan's recovery.

The central bank also announced it would five trillion yen in T-bills and other fixed income government backed assets to shore up the economy. Japanese equities rallied on the announcement, with the Nikkei closing up nearly 1.6% within the day.

In its statement of policy, the Bank of Japan cited serious concerns regarding heightened uncertainty in the United States and the increased valuation of the yen, whose strength has been damaging to exports this year. In September, the Japanese central bank said it would intervene in the currency market, purchasing dollars to try and control the yen's runaway rise.

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