The Japanese yen lost ground Tuesday following fresh remarks by Japan’s economic minister about the currency’s recent price levels.
The U.S. dollar rose to 102.50 yen, up from ¥102.20 earlier in Tokyo trading hours following reports that Economy Minister Akira Amari said he hopes the yen’s foreign-exchange rates will settle at levels that “match the basic strength of the Japanese economy.”
He also declined to comment to reporters on whether a correction in the yen has been completed or not. The statements came on the same day the Bank of Japan began its two-day monetary policy meeting.
Over the past weekend, Amari had reportedly said on a talk show that the “correction” of the yen was “largely completed.” Further weakness in the currency would be harmful, he was quoted as saying, and the government’s job is to determine how to minimize the negative impact.
After those initial comments, the greenback fell on Monday fell to ¥102.33, down from ¥102.97 late Friday.
But in his Tuesday remarks, Amari said at press conference that he would like to see the market find a point where the effect of the currency level on Japan’s exports and imports “achieves a balance.”
The dollar’s march higher against the yen started to pick up pace in mid-November, once it appeared likely that Shinzo Abe, a proponent of aggressive easing measures by the Bank of Japan, would likely be elected as Japan’s new prime minister the following month.
Over the six months since then, the yen has dropped 21% against the dollar, and the greenback has vaulted above the ¥103 level for the first time since late October 2008. Gains for the dollar accelerated after the Bank of Japan in April formally announced a two-year easing campaign aimed at stimulating economic growth and defeating years of deflation.
Yen weakness has helped bolster profit for many Japanese exporters, but it’s also made Japan’s imports more expensive, including energy and food.
Meanwhile, the Australian dollar traded at 98.02 U.S. cents, up from 97.63 U.S. cents shortly before the release of minutes from the Reserve Bank of Australia’s policy meeting on May 7. The Aussie bought 98.18 U.S. cents on Monday.
The central bank earlier this month cut its key interest rate by a quarter-point to a record low 2.75%.
Tuesday’s minutes confirmed tame inflation a key driver in the decision to cut the rate, RBC senior economist Su-Lin Ong said in a report.
“This keeps an easing bias in place, although we note that developments over the last two weeks — stronger domestic data and a weaker currency — take some pressure off the RBA to follow up with another cut,” she wrote.
Australia’s currency has lost more than 4% against the dollar since the early May rate cut.
In other forex moves Tuesday, the ICE dollar index , a gauge of the greenback’s movement against six other major currencies, rose to 83.810 from 83.791 late Monday.
The WSJ Dollar Index , an alternative measure of the currency’s moves against a slightly wider basket, moved up to 75.37 from 75.35.
The euro bought $1.2890, little changed from $1.2892 on Monday, and the British pound slipped to $1.5254 from $1.5265.
Marketwatch
