The yen chalked up heavy gains on Friday across the board, extending a week of gains on the back of heightened speculation about a possible revaluation of the Chinese yuan.
The US dollar and particularly the euro were sharply lower versus the Japanese and other Asian currencies, most of which which are seen as potential beneficiaries of any move by China to let its currency appreciate. The yen also benefited from a drop in crude price below US$50 per barrel in the New York afternoon.
The dollar fell to a five-and-a-half week low versus the yen, falling 1.1 percent from late Thursday. The euro plummeted to an 11-week low against the yen, dropping 1.3 percent over the session.
The dollar, which had fallen back earlier in the session, was actually higher versus the euro late in the New York afternoon. The huge drops in the euro-yen exchange rate aided the dollar against the single currency, as did rising US equities and longer-term Treasury yields.
In late New York trading, the dollar was at ¥104.79, from ¥105.98 late Thursday, while the euro fell to ¥134.89, from ¥136.73 late Thursday. The euro has now lost 4 percent versus the yen since Thursday of last week.
The euro was at US$1.2869 from US$1.2894. Versus the Swiss franc, the dollar was at SF1.1951 from SF1.1930, while the pound was at US$1.9074 from US$1.9064.
The talk about a yuan revaluation reached a fevered pitch in the Asian session. A front-page article in Friday's China Securities Journal, a state-owned financial daily, suggested the time was "ripe" for further currency reform, citing unnamed analysts.
However, it was a sudden dip in the dollar's value that spurred speculative activity. After trading in a tiny range of 8.2763 yuan to 8.2765 yuan for most of this year, the US dollar briefly tumbled to a low of 8.2700 against the yuan during the early afternoon in Shanghai's spot market on Friday -- roughly a three-year low.
Within minutes, a fresh wave of revaluation speculation surged around Asian markets. The dollar remained lower even though the dollar/yuan rate quickly bounced back to a normal level and China's central bank said it had no plan to announce any policy change.
Mercuries Life Insurance Co (三商美邦人壽) shares surged to a seven-month high this week after local media reported that E.Sun Financial Holding Co (玉山金控) had outbid CTBC Financial Holding Co (中信金控) in the financially strained insurer’s ongoing sale process. Shares of the mid-sized life insurer climbed 5.8 percent this week to NT$6.72, extending a nearly 18 percent rally over the past month, as investors bet on the likelihood of an impending takeover. The final round of bidding closed on Thursday, marking a critical step in the 32-year-old insurer’s search for a buyer after years of struggling to meet capital adequacy requirements. Local media reports
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