Speculators heavily short on Yen

Earlier today, the Yen still found itself on the defensive. The Euro reached a new 5 month high against the Japanese currency and the Dollar was still nursing losses, however was steady, after rally pauses late last week.
The Dollar retreated from an 11 month high of 84.187 Yen hit on Thursday and earlier today stood at 83.42 Yen.
Much depends on the BOJ's monetary policy when determining whether the greenback may rise further against the Yen in the coming months. Should the BOJ continue to push with new monetary easing measures and not do enough to convince the domestic market in Japan, that it is serious about raising the inflation rate to about 1%, then the Dollar/Yen could probably continue to rise.
Overall, the Dollar remained little changed against a basket of currencies at 79.791, having succumbed to profit-taking last week.
The Euro had dipped 0.1 percent to $1.3167.
It's worth noting that, not since 1999 have currency traders been bullish on the Dollar for so long as they have been recently. This seems a clear indication, that the market sees the U.S. resuming its role as the engine of global economic growth.

Yen Recovers After 5-Month Low Against Euro

The Japanese Yen retreated in early trading in Asia on Monday in a move which saw the Euro reach a fresh 5-month High.
However, the Euro found resistance and has since slipped off the recent High setting the Japanese Yen on the offensive.

After last week's cut in cash reserve ratio (CRR) for scheduled banks, the Reserve Bank of India (RBI) kept both CRR and repo rates unchanged in today's mid-quarter monetary policy review meet. In reaction to this, the Indian stock markets have fallen further into the negative territory after opening trade on a weak note. At the time of writing, BSE Sensex was down by 217 points (1.2%). Red marks were seen across all sectoral indices.  Asian stock markets presented a mixed picture with Japan (up by 0.7%) being the top gainer, while China (down by 0.7) faced selling pressure.

Greenback growth continues

Today, the Dollar strengthened across the board, hitting an 11 month high to the Yen
On Wednesday, the Dollar reached an 11-month high to the Yen and a 1-month high on the Euro.
The Federal Reserve's economic forecasts resulted in traders downplaying expectations of further monetary easing.

The greenback had hit a session high at 83.32 Yen, which was its highest level since mid-April.
A few other factors contributed to this. The U.S. 2-year Treasury yields have, for example, touched a 7 and a half month high after solid retail sales data, which made the Dollar less attractive as a funding currency for carry trades. It seems that Tokyo exporters were also reluctant to sell it as they expect more strength in the short term.

The recent easing steps by the Bank of Japan, the country's trading deficit and strong demand for fossil fuels after the recent nuclear crisis, have also contributed to the Dollar rising nearly 10% on the Yen from early February.
The greenback has also gained against other currencies, with its index hitting a 7 and a half week high of 80.42.

Meanwhile, in Europe, Germany's ZEW survey data leaped to its highest level since June 2010, a move which is prompting many economists to believe that Europe's largest economy has recovered from a weak patch

Yen Rebounds, Euro Still Hampered By Debt Doubts

The Japanese Yen bounced back after the BOJ policy meeting revealed no surprise policy easing for the single currency.
The Euro continues to be hampered by doubts that the debt crisis is over. As a result, the currency's outlook remains unstable seeing that the Euro Zone economy is slowly slipping into recession

Greenback gain holds - investors await news from Fed
A brighter US economic outlook has helped the Dollar.Earlier today, the greenback was testing a seven-week high against a basket of currencies. It was assisted by expectations that encouraging economic news would persuade the U.S. Federal Reserve, at least for the moment, not to apply any fresh stimulus.

The Dollar's overall strength was in contrast to the Euro's weakening, which saw it touch a one-month low on Monday. The common currency is still feeling the effects of fears that the European debt crisis could worsen again, even after Greece's success in concluding an historic debt-cutting swap deal.
Many market players remain uncertain about whether other southern European countries, like Portugal and Spain, can escape a similar fate.
The Euro stood at $1.3157 earlier today, having recovered from hitting a one-month low of $1.3079 on Monday.

Transaction within four corners of law can be treated as “sham” & “colourable device” by looking at “human probabilities”

Killick Nixon Ltd vs. DCIT (Bombay High Court)

In AY 2000-01 the assessee borrowed Rs. 48 crores from the G. K. Rathi group and used that to buy shares in three 100% subsidiary companies. Though the fair value of the shares was Rs. 24, the assessee paid Rs. 150 for each share. The amount received by the said subsidiary companies was transferred back to another company of the G.K. Rathi group. In AY 2001-02, the said shares were sold for Rs. 5 each and a short-term capital loss was claimed and this was set-off against other long-term capital gains. The AO, CIT (A) & Tribunal (order attached) rejected the transaction of investment into, and sale of, shares as a sham. On appeal by the assessee, HELD dismissing the appeal:

 Whenever there are reasons to believe that the apparent is not real; then the taxing authorities are entitled to look into surrounding circumstances to find out the reality and apply the test of human probabilities. The judgement of the Supreme Court in Vodafone International vs. UOI makes it clear that a colourable device cannot be a part of tax planning. Where a transaction is sham and not genuine, it cannot be considered to be a part of tax planning or legitimate avoidance of tax liability. It was clarified that there is no conflict between McDowell 154 ITR 148 (SC), Azadi Bachao Andolan 263 ITR 706 (SC) & Mathuram Agarwal. On facts, as the purchase and sale of shares was found to be a sham, the loss cannot be allowed (Sumati Dayal 214 ITR 801 (SC) followed)

Contrast with Azadi Bachao 263 ITR 706 (SC) where it was held that the “motive” of the transaction could not be examined & Wallfort Shares where “dividend stripping loss” was upheld.

Euro Slides After Greek Debt Swap

  The Euro slipped lower on Friday after Greece  announced that 85.8% of private creditors accepted  its bond swap offer.
  As a result, the Mediterranean nation moves closer  to securing funds needed to avoid debt default, but  there is still a lot of confusion in the market  regarding the implications for currencies.