Yen surges as Bank of Japan chief says additional weakness ‘unlikely’
The yen rallied sharply in Wednesday afternoon trading after the head of the Bank of Japan said a further slide in the currency was unlikely.
In response to the comments from Haruhiko Kuroda, the dollar slid to 122.71 yen from 124.53 yen in morning trade. It was above 125 yen, at a 13-year high, earlier this week.
The euro also dropped, buying 138.67 yen from 140.51 in the morning, while it was slightly higher at US$1.1303 from US$1.1297 in New York.
Since the BOJ unleashed another round of monetary stimulus in October, the Japanese unit has been on a steep slide. This accelerated after U.S. Federal Reserve chief Janet Yellen signaled that the U.S. central bank was likely to start raising interest rates this year — a plus for the dollar.
But “a U.S. rate hike would not necessarily lead to a cheaper yen,” Kuroda told a parliamentary committee Wednesday, calling a further decline in the unit “unlikely.”
While the yen’s sharp decline has been good news for Japanese exporters, it has pushed up the cost of imports and eroded consumers’ purchasing power.
Earlier Wednesday, expectations that the U.S. central bank would start raising interest rates before year-end were amplified after the JOLTS (Job Openings and Labor Turnover Survey) report showed a surge in job vacancies.
Meanwhile, there is growing speculation that Greece is nearing a bailout deal with its international creditors that would avoid a default and possible eurozone exit.
Cash-strapped Athens submitted new proposals Tuesday to end a standoff with the European Union and the International Monetary Fund before the latest rescue package expires at the end of June.
The dollar weakened against other AsiaPacific currencies, easing to SG$1.3481 from SG$1.3543 on Tuesday, to 1,111.38 South Korean won from 1,120.70 won, and to 33.70 Thai baht from 33.73 baht.
It also declined to 44.97 Philippine pesos from 45.13 pesos, to 63.92 Indian rupees from 63.98 rupees, and 13,310 Indonesian rupiah from 13,380.00 rupiah.
The Australian dollar rose to 76.92 U.S. cents from 76.89 cents while the Chinese yuan bought 19.82 yen from 20.08 yen.