The yen yesterday rallied sharply in afternoon trading after the head of the Bank of Japan (BOJ) said a further slide in the currency was unlikely.
In response to the comments from Bank of Japan Governor Haruhiko Kuroda, the US dollar slid to ￥122.71 from ￥124.53 in morning trade. It was above ￥125, at a 13-year high, earlier this week.
The euro also dropped, buying ￥138.67 from ￥140.51 in the morning, while it was slightly higher at US$1.1303 from US$1.1297 in New York.
Since the bank unleashed another round of monetary stimulus in October last year, the Japanese unit has been on a steep slide.
This accelerated after US Federal Reserve Chair Janet Yellen signaled that the US central bank was likely to start raising interest rates this year — a plus for the US dollar.
However, “a US rate hike would not necessarily lead to a cheaper yen,” Kuroda yesterday told a parliamentary committee, 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.
“Japanese officials clearly don’t like to see their currency moving in one direction too fast,” Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong, told Bloomberg News.
Earlier yesterday, expectations that the US central bank would start raising interest rates before the year-end were amplified after the US’ Job Openings and Labor Turnover Survey report showed a surge in job vacancies.
Separately, a small business survey showed businesses were hiring more people and paying them more.
In Asian trading, South Korea’s won jumped the most in almost three months and the New Taiwan dollar strengthened.
The won and NT dollar tend to track the yen as companies in the three economies compete for exports in global markets. While the Bank of Korea has cut interest rates and expressed concern about the yen’s weakness, Taiwan’s central bank has so far avoided any easing.
The won advanced 1 percent, the most since March 19, to close at 1,108 per US dollar in Seoul, according to prices compiled by Bloomberg. The NT dollar rose 0.5 percent, its biggest increase since April, to close at 31.156, Taipei Forex Inc prices showed. Both declined against the yen.
The US dollar also weakened against other Asia-Pacific currencies, easing to S$1.3481 from S$1.3543 on Tuesday, to 33.70 Thai baht from 33.73 baht, and to 44.97 Philippine pesos from 45.13 pesos. The greenback also declined to 63.92 Indian rupees from 63.98 rupees, and to 13,310 Indonesian rupiah from 13,380.00 rupiah.
The Australian dollar rose to US$0.7692 from US$0.7689 while the Chinese yuan bought ￥19.82 from ￥20.08.
Additional reporting by Bloomberg
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