Japanese Economic Stimulus Plan, Yen Trades Lower

To help Japanese citizens with high fuel and food prices, the government is considering an economic stimulus plan. Speculation has placed the size of the stimulus package around 2 to 3 trillion yen ($18.35 to $27.53 billion in USD), although no formal announcement has been made yet. Some anticipate that it may be as much as 8 trillion yen. The plan will most likely be designed to help farming and fishing businesses struggling with oil prices and support companies that have experienced fallout from rising commodity prices, as well as offer senior citizens expanded medical services and cut back on expressway tolls.

The stimulus may also provide a temporary stay against recession and build strength for the yen in online forex transactions. In late August, the yen fell against the USD, GBP, and EUR (after multi-month highs). The only currency against which the yen saw higher forex trading numbers was the CHF. Yet opposition to the stimulus plan questions whether it addresses the salient issues such as the credit crunch, rising energy prices, and slowing exports that are bearing down on the Japanese economy. Others question whether the stimulus plan is even warranted from an economic standpoint.  Although Japan could enter a recession soon, analysts seem to think that it will be mild, helped by strong fundamentals. Unlike in the past, the current economy is more resilient and has suffered less subprime damage than Europe and America have incurred.