Forex Market Update: Yen Falls Against Euro and Dollar
The Japanese yen fell against the euro and the U.S. dollar in early trading on Tuesday following a statement from G7 countries. The euro, meanwhile, edged higher against the dollar.
In recent weeks, there have been rising tensions over currency wars as central banks across the world implement additional monetary easing measures. While in the U.S., the Federal Reserve has pledged to continue with its aggressive bond buying program for a considerable period, in Japan, the Bank of Japan (BOJ) has come under increasing pressure from the new Prime Minister, Shinzo Abe, to implement further monetary easing measures to boost economic growth and fight inflation. The European Central Bank (ECB) has also kept interest rates at record low; however, it has not been as aggressive as the Fed and the BOJ.
Although the Fed and the BOJ have implemented measures to boost economic growth, some policymakers, especially in Europe, have complained that this would lead to currency wars. The G7 today said in a statement that it remained committed to market-determined exchange rates while agreeing that disorderly exchange rate movements and excess volatility can harm economic and financial stability.
Speaking to Reuters, Valentin Marinov, Head of European G10 FX strategy at Citigroup, said that the G7 statement indicates that there will be little attempt to single out Japan as a currency manipulator at the G20 meeting as long as the Japanese polices deal with domestic issues like deflation and are not targeting the yen.
At last check, the euro was trading 0.3% higher at `126.80 yen. The single currency is trading close to its three-year high of 127.71 yen, which it reached last week. The dollar, meanwhile, was trading at around 94.30 yen, close to its 33-month high against the Japanese currency.
The euro edged higher against the dollar. At last check, the single currency was up 0.4% to $1.3455.