“Whatever the circumstances, we must definitely avoid competitive devaluation, and I think we should refrain from arbitrary intervention in currency markets”, Abe was quoted as saying in the interview. “But the Fed did not reduce its rate hike projections in March due to US concerns but rather worries about overseas economies, so a strong jobs report did not do much to support tightening expectations”, said Shin Kadota, chief Japan FX strategist at Barclays in Tokyo.
Advertisement
Inheriting the dollar-selling, yen-buying trend in NY the previous day, the dollar remained on a weak footing during Tokyo trading as market players were encouraged to buy the yen after Prime Minister Shinzo Abe’s remarks, reported by the Wall Street Journal, against currency market intervention, dealers said. But bankers believe Japan is hamstrung in what it can do in the run-up to G7 meetings in May.
“Against such a backdrop, it’s quite unlikely that Japan resorts to currency intervention to stop yen appreciation”.
The Bank of Japan shocked markets with its decision to adopt negative interest rates earlier this year but the yen has continued to strengthen, posing a challenge to the central bank’s attempts to spur price growth. But his comments did little to stem the yen’s ascent. It also makes it hard for the Japanese government to shore up its flagging economy.
“What the Japanese government can do at present is just to proceed with the organisation of the fiscal stimulus package”.
The yen at 110 per United States dollar is “a key psychological level” that will spark nervousness about intervention to weaken it because of the damage a stronger currency inflicts on Japanese corporate profits, according to Daragh Maher, head of USA currency strategy at HSBC Holdings Plc in NY.
The common currency was almost flat at $1.1375 after probing a low of $1.1335 overnight.
Minneapolis Fed President Neel Kashkari said on Monday he is “comfortable” with the current stance of US monetary policy, and expects “moderate” economic growth ahead.
Australia’s ASX 200 was up 0.10 per cent and South Korea’s Kospi was up 0.31 per cent as of 8:56 a.m. HK/SIN time. The Aussie was hurt earlier this week by a dent in global risk appetite and slide in commodities.
Advertisement
Major indexes in the U.S. closed lower, with the Dow Jones industrial average down 0.75 per cent, the S&P 500 lower by 1.01 per cent and the Nasdaq composite off 0.98 per cent. The FTSE closed down 1.19 per cent. The loonie was steady at C$1.3129 per dollar after pulling away from an eight-day low of C$1.3219 reached on Tuesday.
