Yen slides past key level as Bank of Japan stands pat on rates
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Japan’s currency slid as much as 0.4 per cent against the greenback to 155.44, a level last seen in November.
PHOTO: AFP
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TOKYO – The yen weakened past the key level of 155 versus the US dollar on Dec 19 after the Bank of Japan (BOJ) kept interest rates steady.
Japan’s currency slid as much as 0.4 per cent against the greenback to 155.44, a level last seen in November. That followed a 0.9 per cent slide in the yen on Dec 18 after the US Federal Reserve cut interest rates while signalling caution over future rate reductions.
The yen also weakened against the Singapore dollar, trading down 0.4 per cent at 114.031 as at 12.50pm Singapore time.
The 155 level for the dollar-yen pair is closely watched by strategists, who see a slide to this mark as a potential trigger for verbal intervention from the Japanese authorities, and added pressure on the BOJ to hike rates.
“The Fed’s hawkish tilt and BOJ’s pause could bring fresh reasons for yen traders to ‘carry’ on,” said Ms Charu Chanana, chief investment strategist at Saxo Markets.
The decision to stand pat was largely priced in by overnight index swaps prior to the meeting and predicted by the majority of economists in a Bloomberg survey.
Rate hike bets had receded in recent weeks, contributing to a six-day losing streak in the yen till Dec 16, its longest stretch of declines versus the dollar since June.
A key focus for yen watchers would be whether BOJ governor Kazuo Ueda gives any hints about the next rate hike at his news conference later on Dec 19.
The Japanese central bank may face increased pressure to raise rates if the yen’s slump continues.
“There is an expectation that (BOJ governor Kazuo Ueda) will provide stronger hints of a January hike,” said Mr Alvin Tan, head of Asia FX strategy at the Royal Bank of Canada in Singapore.
“If he is totally non-committal, then US dollar/yen upside has more legs.” BLOOMBERG
