Japanese Finance Minister Shunichi Suzuki stated that the government would closely monitor the currency market and respond accordingly, though these remarks had minimal immediate impact on the yen, which has declined nearly 14% against the dollar this year.
TOKOYO: (UrduPoint/Pakistan Point News-Nov 14th, 2023) The US Dollar (USD) reached its highest point in over a year against the Japanese Yen on Monday, as expectations for U.S. Federal Reserve interest rate cuts next year diminished.
Japanese Finance Minister Shunichi Suzuki stated that the government would closely monitor the Currency market and respond accordingly, though these remarks had minimal immediate impact on the yen, which has declined nearly 14% against the dollar this year.
"We're in this pause where the dollar has peaked, and the U.S. economy is slowing, but people are going to wait for confirmation," noted Societe Generale strategist Kit Juckes. He added, "Given the move in U.S. Treasuries, of course, the yen is not rallying yet," referring to U.S. bond yields.
On Monday, the dollar surged to 151.88 yen, its highest level since October 2022, registering a 0.15% increase. The previous week saw a significant rally of around 1.4%, marking the largest weekly jump against the yen in three months.
Last week, Federal Reserve policymakers, including Chair Jerome Powell, hinted that the battle against inflation might not be over, leading to a reduction in market rate cut expectations. This development pushed up short-dated Treasury yields and supported the strength of the U.S. dollar.
Monday's data from Japan revealed that wholesale inflation slowed to below 1% for the first time in over 2-1/2 years, indicating a fading of cost pressures that had been contributing to price increases. However, this did not provide significant support to the yen.
Despite this, markets stayed vigilant for potential intervention from Tokyo to strengthen the struggling yen. BNY Mellon senior macro strategist Geoff Yu stated, "At this point, it's still about the pace of moves, so if we move at the current pace, it is manageable for Japan." He emphasized that the overall dollar environment was a driving force in market dynamics.
The euro showed slight strength at $1.0684, while the British Pound was 0.2% stronger at $1.2254. Against the euro, Britain's currency firmed 0.2% at around 87.24 pence following news of changes to the composition of the UK government. Prime Minister Sunak's reshuffle included the return of former leader David Cameron as foreign minister, prompted by the dismissal of Interior Minister Suella Braverman due to her criticism of the police, which threatened Sunak's authority.
Global currency markets maintained a generally subdued tone, with traders awaiting the latest U.S. inflation figures on Tuesday to gauge the likelihood of rate cuts next year.