The Japanese government revealed the new budget that is planned for the next fiscal year. It features an increase of 6.6% to 88.5 trillion Yen – about 990 billion dollars 0 the highest budget ever.
This move contradicts the government’s long term effort to reduce the budget and to reach a balanced budget by 2011.
This bold move is intended to fight the recession that Japan entered in the third quarter. The forecast for 2009 is flat growth rate – 0%.
This follows the sharp decline in interest rates – the BOJ lowered the rates to 0.1%.
Though the rate change and the statement by the BOJ had little impact on the JPY, this additional move by the Japanese government will probably put more pressure on the Japanese currency, just before Christmas.
So, the Japanese Yen is expected to fall against all currencies when the Forex market opens this week.