The yen slumped against all of its major counterparts after the G7 nations intervened in foreign-exchange markets on Friday, paring gains earlier in the week as the nation copes with a deadly earthquake.
The Japanese currency fell the most in more than two years against the US dollar, paring a weekly gain, after the Bank of Japan (BOJ) was joined by G7 central banks in an effort to stabilize foreign exchange markets. The yen surged 4.5 percent in 26 minutes on Thursday to a post-World War II high on concern Japanese investors would repatriate assets to pay for rebuilding after the quake-triggered tsunami on Friday last week and resulting nuclear power crisis.
The euro rose against the US dollar on speculation the European Central Bank will increase interest rates before the US Federal Reserve.
“People were expecting -intervention all week and finally they came in,” said David Mann, head of research for the Americas at Standard Chartered Bank, in an interview with Bloomberg Television. “This is about limiting volatility and reducing uncertainty.”
The yen strengthened 1.5 percent to ￥80.58 per US dollar, from ￥81.84 on the day the earthquake struck. It fell 2.1 percent on Friday, its first drop in six days, and hit a record high of 76.25 the previous day.
The yen declined 0.5 percent to ￥114.31 per euro. The US dollar depreciated 2 percent to US$1.4182 per euro, from US$1.3903.
The yen had appreciated 5.2 percent since the magnitude 9.0 earthquake and tsunami through Thursday. Japanese Minister of Finance Yoshihiko Noda said the coordinated central bank interventions are an attempt to limit the damage a strong Japanese currency will have on the nation’s economy.
The BOJ added ￥4 trillion to Japan’s financial system on Friday, bringing its emergency fund injections this week to 38 trillion yen.
OTHER ASIAN CURRENCIES
The Thai baht and Indonesian rupiah gained the most this week among Asian currencies.
The Bloomberg-JPMorgan Asia Dollar Index climbed for a second day on Friday, trimming a loss for the week to 0.3 percent. The gauge sank to a three-week low on Wednesday, as uncertainty caused by the Japan crisis sapped demand for emerging-market assets.
“Markets are reacting positively to the intervention news and signs of support from the G7 is reassuring investors,” said Brian Jackson, an emerging-markets strategist at Royal Bank of Canada in Hong Kong. “We see risk appetite coming back, not just in the currencies, but in equities as well.”
The baht strengthened 0.5 percent this week to 30.32 per US dollar in Bangkok. The rupiah advanced 0.3 percent to 8,773 and India’s rupee rose 0.2 percent to 45.1425.
The New Taiwan dollar was little changed this week at NT$29.60.
The Philippine peso dropped to a six-week low on Thursday to 44.01 per US dollar on concern political tension in the Middle East will spur an exodus of Filipino workers from the region, hurting remittances. The peso declined for a second week.
The Persian Gulf region accounts for about 30 percent of overseas remittances, central bank Governor Amando Tetangco said this month.
The peso declined 0.1 percent this week to 43.705 per US dollar, according to Tullett Prebon PLC.
Elsewhere, South Korea’s won and Malaysia’s ringgit both dropped 0.2 percent to 1,126.65 and 3.0530 respectively. The yuan gained 0.1 percent to 6.5691 and Singapore’s dollar retreated 0.2 percent to S$1.2766.
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