The Bank of Japan has announced its intentions of cutting the benchmark interest rate and increasing the purchase of bonds. The move is aimed at controlling the rising deflation and improving the economy, which has suffered in recent months.
The yen plummeted on the interest rate cut though the stock exchange saw increased activity. The Nikkei 225 Stock Average saw an up tick of 1.5 percent to 9,518.76 at the 3 p.m. close in Tokyo, recovering from a 0.5 percent dip earlier. The broader Topix index rose 1.2 percent to 832.64. The Nikkei 225 has seen a major boost since Sept. 15, when the government intervened in the foreign-exchange market that resulted in the weakening of the yen for the first time since 2004.
The Japanese government decided to up the interest rate after weeks of speculations. The Bank of Japan has expressed its intentions to purchase up to 5 trillion yen ($60 billion) in government bonds and other assets. The bank hopes that it will augment the country's economy and will trigger a recovery. The BOJ cut the benchmark interest rate to a range of zero percent to 0.1 percent; it previously was set to 0.1 percent target. The rate will remain constant until the deflation is controlled.
The yen depreciated to 83.99 against the dollar, against its 83.58 at 9 a.m. in Tokyo. It now sells at 114.96 for the euro, up from 114.08. The devaluation means increased trade activity for the Japanese companies. The Nikkei 225 has seen a dip of 9.7 percent this year.
