USD/JPY: Yen catches a bid as Japan eyes higher fuel aid, extra budget in relief package

Citing a draft of Japan’s government-planned relief package on Friday, Reuters reports that Prime Minister Fumio Kishida’s administration will compile another comprehensive relief package after laying out the outline of long-term economic and fiscal policy in June.

Key takeaways from the draft

To raise ceiling for gasoline subsidies for wholesalers to 35 yen per litre from 25 yen

Japan will submit extra budget to current parliament session to replenish reserves, fund spending to ease blow from rising raw material costs.

Must be vigilant to impact yen's declines could have on households, importers.

Must consider steps to ensure stable electricity supply, including usage of nuclear power.

Will compile another comprehensive relief package after laying out outline of long-term economic, fiscal policy in June.

Market reaction

The yen was rescued by the hopes for the additional fiscal stimulus by the Japanese government, as outlined in the draft above.

The USD/JPY pair retreated from daily highs of 128.68, last seen trading at 128.42, still adding 0.07% on the day.