What about peoples’ opinion that BOJ will raise its rate in the coming meet. Remark about the prevailing situation. Can the yen get sank? How much should they increase their rates? Also give your views about the carry trades

Taking a look on what they said last year, I don't think so. There aren’t any apparent changes since the last month so they won’t be changing their rates. It’s actually a lose/lose situation. They will certainly lose if they don't raise rates, the yen will really tank. Even if they raise rates by .25, people will know that they will not raise the rates for at least another 6 to 7 months. The BOJ won't be raising the rates continuously; the rate differential has been substantial in 2006. Even if the FED lowers rates. I understand that as long as there is at least a 4-point spread between interest rates, carry trades will continue. According to a report by forexplane.com, which also provides me an opportunity to have a live chat with the fellow forex traders, last December they haven’t raised their rates. So let us see…

hi,

JPY

The Bank of Japan (BOJ) announced on Tuesday that is going to begin buying shares of Japanese banks to the tune of 11 Billion US Dollars. The BOJ believes that the biggest risk to their financial services industry is the exposure within the equity markets.

The stimulus plan would commence immediately and would allow for shares that are rated BBB- and above to be purchased until April of 2010. Traders were skeptical that this move would cause a rally in the Japanese equity markets and mark a return of the speculators with an appetite for risk.

Analysts and brokers trading Forex believe that the move will help the Japanese banks in the long run, however the announcement did not immediately trigger a rally in the Japanese currency or equity markets.

The US Dollar gained ½ of 1 percent against the Yen to 89.51. The move was mild and should be the rest of the week as the January 90.00 options on the pair are expiring this week and next. On Tuesday, close to 1 Billion US Dollars worth of USD/JPY options expired.