Home Business Yen hits 34-year low, equity markets mixed before key U.S. data

Yen hits 34-year low, equity markets mixed before key U.S. data

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Yen hits 34-year low, equity markets mixed before key U.S. data

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People walk past an electronic board showing the rate of the Japanese yen versus the US dollar along a street in Tokyo on March 27, 2024.
| Photo Credit: AFP

London

The yen plunged Wednesday to a 34-year dollar low on fervent speculation that the Bank of Japan could step into markets to support the unit, having hiked interest rates last week for the first time since the global financial crisis.

The yen dropped to 151.97 to the dollar in Asian trading hours, touching the lowest point since 1990 before strengthening somewhat in the European session.

A top Bank of Japan official indicated that it would press ahead with a loose monetary policy, even after it pulled the plug on its ultra-aggressive monetary stimulus programme to deliver its first hike in borrowing costs since 2007.

The weaker yen helped spur a rally in Tokyo’s benchmark Nikkei stocks index as exporters benefited, making it Asia’s best performer.

Other global stock markets diverged before this week’s US data, which is expected to shed light on the outlook for Federal Reserve interest rates.

World oil prices meanwhile trod lower on signs of weakening demand in major consumer the United States.

Will need more’

“After hitting its highest since 1990, the yen slackened a bit overnight on the comments but has not budged much and the market will need more,” said analyst Neil Wilson at trading firm Finalto.

“Usually in these situations the market will test how far Tokyo is prepared to let it go.”

Earlier in the day, BoJ board member Naoki Tamura said officials would not embark on a speedy programme of monetary tightening as they try to nurture an economic recovery while keeping a lid on inflation.

Finance Minister Shunichi Suzuki said the government was watching the situation closely and vowed to act if necessary.

“We’re monitoring market movements with a high sense of urgency. We will take resolute action against excessive moves, without ruling out any options,” he told reporters.

Global markets diverged Wednesday with investors on tenterhooks before key U.S. data releases this week, including the Federal Reserve’s preferred gauge of inflation and the looming corporate earnings season.

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