The US dollar yesterday held close to a six-month peak, as jitters over China and global growth weighed on risk appetite, while the yen strengthened as Japan’s top currency diplomat sent a warning about the currency after it earlier dropped to a 10-month low.
The yen rose by as much as 0.4 percent to ￥147.02 per US dollar after Japanese Vice Minister of Finance for International Affairs Masato Kanda said the ministry would not rule out options if speculative moves persist, the strongest warning since last month.
Kanda has been the central figure in the nation’s efforts to stem the sharp decline of the yen since last year.
Photo: Reuters
The yen has hovered at about the key ￥145-per-US dollar level for the past few weeks. As of 8:13am GMT, it stood at ￥147.47 per US dollar, compared with ￥147.82 earlier in the session, which was its lowest since Nov. 4 last year.
“The remarks suggest that intervention could be imminent with the yen in the intervention zone we saw last year,” ING Groep NV global head of markets Chris Turner said.
Japan intervened in currency markets 12 months ago when the US dollar rose past ￥145, prompting the Ministry of Finance to buy the yen and push the pair back to about ￥140.
“I think we’ll probably see intervention, but that doesn’t necessarily mean the underlying trend will turn around any time soon,” Turner said, citing the US dollar’s ongoing strength.
Against a basket of currencies, the US dollar was at 104.77, not far off the six-month high of 104.90 touched on Tuesday. Economic data from China and Europe on Tuesday fanned some fears of slowing global growth, pushing investors to scramble for the greenback.
“Dollar strength remains the dominant play,” Oversea-Chinese Banking Corp currency strategist Christopher Wong (黃經隆) said in Singapore.
Higher-for-longer US interest rates and the relative US growth resilience are supporting the greenback, Wong said.
The euro was up 0.1 percent at US$1.0733, having fallen to a three-month low of US$1.0705 on Tuesday. Sterling was last at US$1.2559. It also touched a three-month low of US$1.25285 on Tuesday.
The New Taiwan dollar yesterday fell against the US dollar, down 0.23 percent to close at NT$31.967, while the Chinese yuan fell to a 10-month low against the greenback before paring some losses as state banks stepped in to offer support.
Similar currency defense measures exist elsewhere in Asia. Taiwan’s foreign exchange reserves declined last month for the first time in nearly a year, as the monetary authority intervened in the market.
In Thailand, the central bank has warned that rapid moves in the baht would prompt intervention.
Still, skepticism remains whether these measures are game changers in the absence of a less hawkish US Federal Reserve or a pickup in China’s economy.
Additional reporting by Bloomberg
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