Forex Market Update: Yen Rises Sharply
Friday, February 08, 2013 5:22 PM
The Japanese yen rose sharply against the U.S. dollar and the euro on Friday following comments from Japan’s finance minister. The euro, meanwhile, weakened against the dollar as comments from European Central Bank (ECB) President Mario Draghi continued to weigh on the single currency.
The yen has fallen sharply in the last few weeks. On Wednesday, the Japanese currency fell to multi-year lows against the dollar and the euro. Traders have been bearish on yen after the Bank of Japan (BOJ) implemented an aggressive bond buying program and also raised the inflation target to 2%. Meanwhile, speculation that the BOJ could implement further easing measures amid pressure from Japanese Prime Minister Shinzo Abe also weakened the yen.
However, comments from Japan’s finance minister Taro Aso suggest that not everyone in the Japanese government is pleased with the yen’s recent drop. Aso said that the Japanese currency’s fall has been steeper than intended. The comments suggest that the new BOJ Governor may restrain from further easing measures.
The BOJ’s current Governor steps down next month and prior to Aso’s comments there had been speculation that Abe might appoint a more dovish central bank chief, who will implement further easing measures.
Speaking to Reuters, Camilla Sutton, Chief Currency Strategist at Scotiabank, said that watching BOJ candidates is key for dollar/yen leading into March. Sutton said that she holds a relatively modest year-end dollar/yen forecast of 95.
On Friday, the euro fell 1.2% to 123.92 yen. The single currency fell to an intra-day low of 123.40 yen earlier in the day. The dollar fell 0.9% to 92.78 yen on Friday after touching an intra-day low of 92.15 yen.
The euro also fell against the dollar as comments made by ECB President on Thursday continued to weigh on the single currency. At last check, the euro was down 0.3% to $1.3362.