Japanese Yen Falls on Sluggish Factory Activity, Flat Stocks

The Japanese yen is falling against the greenback midweek as preliminary data found manufacturing activity expanded at the slowest pace since 2016 in November, leaving investors doubtful of strong growth in the fourth quarter. The yen took another hit on forecasts that the Japanese stock market will end the year flat. There was good news for the Bank of Japan (BOJ), though.

According to the Flash Markit/Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI), factory activity tumbled to a seasonally adjust 51.8 this month, down from 52.9 in October. The index has remained above 50 for the 27^th straight month – anything above 50 indicates expansion.
Despite the expansion, the initial reading was the weakest for a month in exactly two years. It also represents a steep decline from last month’s six-month peak.
While the experts are projecting a flat year for the Nikkei, the central bank is experiencing good times. According to the latest BOJ data, its net income climbed in the first half of fiscal year 2018, reaching $7.27 billion, up from roughly $4 billion in 2017. The capital adequacy ratio was 8.3% — anything above 8% suggests financial soundness.
The BOJ benefited from its exchanged-traded funds (ETF) holdings, rising 37% from a year ago.
Meanwhile, holdings of government debt increased 6% from the same period a year earlier.
Amid the shift in the automobile industry, Tokyo is looking to overhaul its car tax system in two years. Moving forward, the Japanese government will implement taxes based on mileage, arguing that ride-sharing means fewer people will own cars and electric vehicles will result in longer-lasting automobiles.
Today, there are three kinds of car taxes: 3% on purchase price, annual car levy, and biannual weight tax. The experts prognosticate that any change would add about $300 in taxes to the typical motorist.
The USD/JPY currency pair tacked on 0.12% to 113.91, from an opening of 113.78, at 14:08 GMT on Wednesday. The EUR/JPY dipped 0.04% to 128.41, from an opening of 128.41.

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