Dollar hits 14-year low on yenBy Lindsay Whipp in Tokyo
Thursday, November 26, 2009
, Posted by Top Trader at 5:18 PM
The yen briefly rose to a 14-year high against the dollar on Thursday but comments from top government officials reinforced traders’ views that there was little chance of immediate Japanese intervention in the currency market.
Hirohisa Fujii, finance minister, said “appropriate action” could be taken if currency moves were “abnormal”, but gave no hint of quick action to stem the fall of the dollar, which at one point dropped to Y86.30 against the yen.
”At this point, [it’s a matter of] watching closely,” Mr Fujii said.
The yen traded at Y86.77 as of early evening in Tokyo.
Traders said the dollar’s fall against the yen was driven by US rather than Japanese factors, and Yoshihiko Noda, deputy finance minister, told Reuters that the government was not thinking of intervening in the currency market at this point.
Mr Fujii has in the past argued that unilateral intervention would be unlikely to be effective and that it would be wrong for Japan to engage in ”competitive devaluation”.
Muneteru Togawa, a director in the foreign exchange department at UBS in Tokyo, said: “The market knows that the [Japanese] government can’t intervene unless there was an agreement for some sort of internationally co-ordinated action.”
A stronger yen is a headache for Japan’s new Democratic party government, as it makes exports less competitive, threatening to derail a fragile economic recovery. Japan relied on shipments overseas for a third of its expansion in the quarter ended September.
While the yen has actually risen only 3.8 per cent against the dollar this year, Shoji Muneoka, head of the Japan Iron & Steel Federation, yesterday underscored widespread concerns among manufacturers, saying that unless the yen’s rise was reined in, the economy would be ”damaged”.
Export-related stocks fell in Tokyo, but the market still outperformed many in the region, with the Topix closing down 0.5 per cent lower at 829.58.
Since becoming finance minister in September, Mr Fujii has appeared relaxed about a stronger yen, noting that it can help the domestic economy by making imports cheaper.
Mr Fujii’s comments did little to stop the slide of the dollar, which dropped to its low against the yen after he spoke.
Christian Carrillo, a senior rates strategist at Société Générale, said: “Effectively the market [was] pushing [the] yen stronger to test what is an ‘abnormal movement’”.Yuji Saito, head of foreign exchange at SocGen in Tokyo, added that investors had been closing their dollar positions ahead of the Thanksgiving holiday in the US, which had pushed the currency higher, while Y87.10 was a major trigger point for selling among investors such as Japanese day traders, exacerbating the dollar’s decline.
”At this point, [it’s a matter of] watching closely,” Mr Fujii said.
The yen traded at Y86.77 as of early evening in Tokyo.
Traders said the dollar’s fall against the yen was driven by US rather than Japanese factors, and Yoshihiko Noda, deputy finance minister, told Reuters that the government was not thinking of intervening in the currency market at this point.
Mr Fujii has in the past argued that unilateral intervention would be unlikely to be effective and that it would be wrong for Japan to engage in ”competitive devaluation”.
Muneteru Togawa, a director in the foreign exchange department at UBS in Tokyo, said: “The market knows that the [Japanese] government can’t intervene unless there was an agreement for some sort of internationally co-ordinated action.”
A stronger yen is a headache for Japan’s new Democratic party government, as it makes exports less competitive, threatening to derail a fragile economic recovery. Japan relied on shipments overseas for a third of its expansion in the quarter ended September.
While the yen has actually risen only 3.8 per cent against the dollar this year, Shoji Muneoka, head of the Japan Iron & Steel Federation, yesterday underscored widespread concerns among manufacturers, saying that unless the yen’s rise was reined in, the economy would be ”damaged”.
Export-related stocks fell in Tokyo, but the market still outperformed many in the region, with the Topix closing down 0.5 per cent lower at 829.58.
Since becoming finance minister in September, Mr Fujii has appeared relaxed about a stronger yen, noting that it can help the domestic economy by making imports cheaper.
Mr Fujii’s comments did little to stop the slide of the dollar, which dropped to its low against the yen after he spoke.
Christian Carrillo, a senior rates strategist at Société Générale, said: “Effectively the market [was] pushing [the] yen stronger to test what is an ‘abnormal movement’”.Yuji Saito, head of foreign exchange at SocGen in Tokyo, added that investors had been closing their dollar positions ahead of the Thanksgiving holiday in the US, which had pushed the currency higher, while Y87.10 was a major trigger point for selling among investors such as Japanese day traders, exacerbating the dollar’s decline.
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