Tokyo, 12 October, /AJMEDIA/
The yen hit a fresh 24-year low in the lower 146 zone against the U.S. dollar Wednesday morning in Tokyo, stirred by prospects that the Federal Reserve will continue raising interest rates aggressively to tame inflation.
The yen fell beyond 145.90, the level at which Japan conducted a yen-buying, dollar-selling intervention last month for the first time since 1998, aiming to stop a further decline of the Japanese currency.
The yen was pressured as the dollar drew buying globally following last week’s stronger-than-expected U.S. employment data, which reinforced views that the Fed will maintain its monetary tightening policy, dealers said.
The U.S. currency was also bought amid a risk-off mood after Bank of England Governor Andrew Bailey said the previous day the British central bank will stop its emergency bond-buying on Friday as scheduled, dealers said.
“The dollar was bought amid concerns that the BOE ending its bond-buying intervention will again cause turmoil in the bond markets,” said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.
The BOE had started buying bonds after unfunded tax cuts announced last month by the country’s new government spurred concerns over financial deterioration and led to a sell-off in government debt securities.
The yen’s continued fall came even after Finance Minister Shunichi Suzuki warned Tuesday that Japan will take “appropriate” steps if the yen’s volatility increases excessively.
“The minister’s remarks were taken by the market to mean Japan will not intervene if the dollar-yen movement is not volatile, so market participants are testing the dollar’s upside slowly,” Kanda added.
Investors are now eyeing the U.S. consumer price index for September due out on Thursday to garner cues for the Fed’s rate hikes, with analysts saying a strong CPI reading may prompt the yen to slide to 147.66 versus the dollar, a level unseen in more than 32 years.
At 1 p.m., the dollar fetched 146.21-22 yen compared with 145.81-91 yen in New York and 145.63-64 yen in Tokyo at 5 p.m. Tuesday.
Tokyo stocks were almost flat in the morning, with market participants refraining from active trading ahead of the U.S. inflation data.
The 225-issue Nikkei Stock Average fell 37.00 points, or 0.14 percent, from Tuesday to 26,364.25. The broader Topix index was down 0.93 point, or 0.05 percent, at 1,870.31.
On the top-tier Prime Market, decliners were led by mining, metal product, and oil and coal product issues.
Stocks were mostly in negative territory as some semiconductor issues were sold after the tech-heavy Nasdaq index fell overnight, but their declines were limited as a weaker yen lifted automakers and other export-related issues, brokers said.
Semiconductor equipment maker Tokyo Electron fell 1,720 yen, or 4.7 percent, to 34,980 yen, while chipmaker Screen Holdings shed 310 yen, or 3.9 percent, to 7,540 yen.
Among Prime Market issues, declining issues outnumbered advancers 1,022 to 734, while 80 ended the morning unchanged.
