Yen under pressure after Wall Street rally
The yen faced selling pressure Thursday as investors’ fears over mainland China’s economy began to ease, and as equity markets rebounded following hints the U.S. Federal Reserve may not lift rates next month.
In Tokyo trading, the U.S. dollar bought 119.97 yen after crossing the 120 yen mark in earlier trading, and nearly flat against 119.98 yen in New York.
The euro was stronger at 136.14 from 135.72 yen. The 19-nation euro fetched US$1.1348, up from US$1.1312 in U.S. trade.
Fears over slowing growth in China had sent investors fleeing to the Japanese currency — a safe haven during times of turmoil — with the U.S. dollar tumbling to 116.18 yen earlier this week, its lowest level since February.
Chinese officials have moved to calm markets and took measures, including cutting interest rates, to support the world’s number two economy.
“The rebound in U.S. stocks has spurred a reversal of the flight to quality we’ve been seeing,” pushing the yen lower, Yasuhiro Kaizaki, vice president for global markets at Sumitomo Mitsui Trust Bank, told Bloomberg News.
“The trend for a gradual weakening of the yen is set to continue after a short-term correction.”
Bank of Japan governor Haruhiko Kuroda said the yen’s sudden rise had been “corrected,” as he held out the possibility of more monetary easing measures to reach a 2.0 percent inflation target.
Further stimulus would tend to weaken the Japanese currency.
“At this stage, we have no concrete proposal for further accommodation. But if necessary, we will certainly make (an) adjustment,” Kuroda said in a speech delivered in New York.
Japan’s top central banker also said the Chinese economy still has “robust” growth prospects, and some analysts have been “too pessimistic” about the country, Kyodo News agency quoted him as saying.
The dollar was mixed against other Asia-Pacific currencies.
It rose to SG$ 1.4034 from SG$ 1.4005 on Wednesday, to 46.70 Philippine pesos from 46.62 pesos, and to 35.65 Thai baht from 35.58 baht.
The greenback weakened to 1,184.44 South Korean won from 1,186.20 won, to 66.02 Indian rupees from 66.15 rupees, and to 14,066 Indonesian rupiah from 14,115 rupiah.
The Australian dollar slipped to 71.13 U.S. cents from 71.19 cents, while the Chinese yuan fetched 18.68 yen against 18.67 yen.