Forex Update: Yen Rises after Comments from Japan’s Finance Minister
The Japanese yen continued to strengthen against the U.S. dollar and the euro in mid-day trading on Friday following comments from Japan’s finance minister. The dollar, meanwhile, edged higher against the euro in mid-day trading on Friday, extending its gains from the previous trading session.
The yen rose after Japan’s finance minister, Taro Aso said that the currency’s recent drop was steeper than intended. The Japanese currency has fallen sharply in recent weeks as the Bank of Japan (BOJ) implemented an aggressive bond buying program and raised its inflation target to 2% in order to boost economic growth. The currency has also fallen on speculation that BOJ will implement further easing measures following the departure of current Governor, Masaaki Shirakawa.
Shinzo Abe, Japan’s Prime Minister, has put pressure on BOJ to implement measures to boost economic growth and fight deflation. Traders are also speculating that Abe will appoint a more dovish Governor at BOJ when Shirakawa steps down next month. However, Aso’s comments suggest that not everyone in the Japanese government is happy with the yen’s sharp drop. A report from Reuters also suggests that there is division within Abe’s cabinet over the appointment new BOJ Governor.
Speaking to Reuters, Win Thin, Senior Currency Strategist at Brown Brothers Harriman, said that central bank and government officials from around the world have given FX markets the gift of volatility this year. Thin said that on Thursday it was ECB President Draghi’s second press conference in a row that caught markets by surprise and on Friday it was Japan finance minister Aso’s turn.
The euro fell to a low of 123.40 yen on Friday before paring some of the losses. At last check, the single currency was down 1.2% to 123.95 yen. The dollar was down 1% to 92.68 yen, at last check.
The dollar, meanwhile, edged higher against the euro, extending its gains from Thursday when it rose 0.9%. At last check, the greenback was up 0.2% against the euro.