Yen gains after Tokyo approves new fiscal spending package
Tokyo unveiled a multi-year fiscal package which included approximately 4.6 trn yen (£34bn) worth of additional spending for the current fiscal year which began in April 2016.
The new measures, which included a total of 7.5trn yen in fresh government expenditures, were meant to bolster the economy without jeopardising the health of the country´s public accounts.
Included in the plan approved by the Cabinet Office on Tuesday, were 3.4 trn yen to help adress Japan´s demographic challenges; 6.2 trn yen for infrastructure projects; 1.3 trn yen to contain the risks arising from Brexit and 2.7 trn yen to help mitigate the impact from the earthquakes which struck Kuamoto and the 2011 tsunami in Tohoku.
"With the Bank of Japan’s efforts failing to stimulate the upward trajectory in growth and prices that the economy has long needed, PM Abe is moving, with a strong parliamentary majority, to boost economic growth and inflation. In spite of the resounding lack of success thus far, the one major advantage that Japan has over the euro zone is in terms of its political landscape.
"With just one government and one centralised fiscal plan, “Abenomics” may yet prove a success (we reiterate....‘may’). The euro zone faces a vastly different set of challenges, with multiple economies and political agendas, different rates of growth and social ambitions and restrictions," analysts at Rabobank said in a research note sent to clients.
As of 11:50 BST dollar/yen was retreating 0.61% to 101.7670.