Euro still rallying. The single currency hit a three-year high today yen: exchange rate at 130, the highest level since January 2010. In turn, the Japanese currency continues to decline against the dollar, aiming for 100 yen per dollar.
The rally against the Japanese currency pushed the single currency towards the high of the month also against the dollar, at 1,3121. In recent days, the decision on new expansionary measures by the Bank of Japan has prompted investors to leave the yen in search of higher yields.
"Although they are not yet visible, the market is positioned for an increase in capital flows out of Japan and the euro is currently the main beneficiary," said Michael Sneyd, foreign-exchange strategist at BNP Paribas in London.
UBS believes the yen's depreciation so far is only a small fraction of what the yen will lose over the next few years, as the Bank of Japan will need to do more than announced last week to meet its target inflation at 2%.
