The US dollar on Friday edged higher on Friday after dropping the previous day despite US inflation accelerating, helping it hit a 32-year peak against the yen.
Sterling slipped after a sharp rally on Thursday, as reports said British Prime Minister Liz Truss was preparing to sack her finance minister and carry out a major U-turn on the government’s tax plans.
The US dollar index rose 0.94 percent to ￥113.3, after falling 0.6 percent on Thursday as investors seemingly brushed off data that showed US consumer prices increased more than expected in September. The index was up 0.45 percent for the week.
Photo: Reuters
The greenback has been on a tear this year as the US Federal Reserve has ramped up interest rates in an effort to tame inflation, pulling money back toward the US. Fears about the global economy have also boosted the safe haven asset.
Yet, the stronger-than-expected inflation data on Thursday counterintuitively triggered a rally in global stock markets and a fall in the US dollar.
Analysts said that short-sellers reversing their positions seemed to have driven the bounce in equities, weighing on the dollar.
“Some of the detail perhaps wasn’t as worrying as the particular core [inflation] print suggested, so when the market started to sell off, people began to cover very quickly,” UBS foreign-exchange strategy head James Malcolm said.
In Taipei, the New Taiwan dollar fell against the greenback, shedding NT$0.005 to close at NT$31.884, up 0.68 percent for the week.
Japanese Vice Minister of Finance Masato Kanda said Japan would take “bold action” to stem currency volatility if needed, after the yen touched a 32-year-low.
Excessive currency moves have negative effects on the economy and the country is ready to take action if they continue, Kanda said late on Friday in Washington.
“We will take appropriate steps against excessive moves especially if that’s led by speculative trading,” Kanda said. “If we judge that currency moves are excessive and if that takes place repeatedly, we are always prepared to take bold action.”
The yen touched a low of ￥148.86 versus the dollar on Friday, the weakest level since August 1990, before ending the session at ￥148.67.
Whiplash moves earlier in the day sparked market chatter of potential intervention by Japanese authorities. A finance ministry official declined to comment on whether the country had stepped into markets again.
The British pound slipped on Friday, after rallying 2.1 percent on Thursday on reports the government could cancel many of its plans for unfunded tax cuts. Sterling fell 1.31 percent to US$1.1183.
Additional reporting by staff writer, with CNA and Bloomberg
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