LONDON: The yen made a modest comeback from a 34-year low vs the dollar on Wednesday, as Wall Street and European stock markets saw a majority of gains ahead of important US inflation data later this week.
After last week’s first interest rate hike since 2007, the Bank of Japan’s top official signaled that the institution will continue its loose monetary policy, which caused the yen to fall to 151.97 to the dollar during Asian trading hours.
Amidst expectations that policymakers could intervene to bolster the yen, the Japanese yen appreciated to 151.03 during the European session, but then declined.
Asia’s top performer, Tokyo’s benchmark Nikkei equities index, saw a surge driven by the cheaper yen as exporters gained.
“The yen slackened a bit overnight on the comments but has not budged much and the market will need more,” said Neil Wilson, an analyst at trading firm Finalto, “after hitting its highest since 1990.”
“The market will typically test how far Tokyo is willing to let it go in these situations.” Naoki Tamura, a board member of the BoJ, stated earlier in the day that in an effort to foster economic recovery while controlling inflation, policymakers will not immediately start a monetary tightening program.
According to Bloomberg News, he stated, “From now on, the handling of monetary policy is extremely important for slow but steady progress in normalization to fold back the extraordinarily large-scale monetary easing.”
The government is “monitoring market movements with a high sense of urgency,” according to Finance Minister Shunichi Suzuki, who also stated that “we will take resolute action against excessive moves, without ruling out any options.”
