The Beaten-Down Yen Bounced in Asia Trade
On Friday, the battered yen rebounded in Asia trade as the Bank of Japan appeared unconcerned about countering an increase in Japanese bond yields, while commodity currencies were on track for a second consecutive weekly gain as export prices remained high.
After hitting a six-year low of 122.44 per dollar in the morning, the yen had snapped a five-day losing streak.
The yen is still down nearly 2% on the week. Still, traders saw the Bank of Japan’s lack of immediate intervention when selling pushed 10-year government bond yields close to its 0.25 percent target as a possible sign of policy flexibility. On Friday, ten-year Japanese government bond yields rose three basis points (bps) to a six-year high of 0.24 percent, surpassing the level that prompted the Bank of Japan to promise unlimited purchases in defense of its target in February.
On Friday, Japanese Finance Minister Shunichi Suzuki stated that the government would continue to monitor currency movements, including recent yen declines.
It is still 5% lower on the month and more than 8% lower on a resurgent Australian dollar. Australia is an exporter of energy and agricultural commodities, and the Ukraine conflict has disrupted supplies.
The Australian dollar was last steady at $0.7523, just a tenth of a cent lower than an overnight four-month high of $0.7527.
The same commodity price movements have harmed the euro. Despite a 0.3 percent gain in the Asia session, it is unchanged for the week at $1.1032.
The US dollar index fell 0.3 percent to 92.437, remaining broadly stable for the week.
Rising commodity prices have bolstered the New Zealand dollar, though it has encountered stiff resistance just below $0.70. Sterling rose to $1.3221 as traders weighed the Bank of England’s cautiously dovish outlook against higher-than-expected February inflation data.
The Mexican peso hit a six-month high of 20.045 per dollar following an expected overnight interest rate hike in emerging markets. However, the country’s president announced it ahead of schedule.
Russia’s rouble held steady at around 100 to the dollar in thin offshore trade, after receiving a boost this week from Russian President Vladimir Putin’s pledge to begin selling gas in roubles to “unfriendly” countries.
Russian stocks fell in a volatile second trading session following a nearly month-long halt. At the same time, the rouble held on to recent gains, trading near 97 to the dollar. More securities, including corporate bonds and Eurobonds, can be traded on Friday. On Thursday, the Moscow Exchange-traded 33 blue chips, with restrictions on trade with foreigners and a ban on short selling.
On Thursday, commodity stocks led the rally with double-digit gains, but the payments were smaller on Friday.
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