By: Barbara Zigah
Institutional investors from Asia bought heavily into the U.S. Dollar on the last day of the Japanese fiscal year, which helped the currency rise to a new 3-month peak versus the Japanese Yen. In early trading in Tokyo today, the first day of the new fiscal year, the U.S. Dollar struck 93.65 Japanese Yen, the highest trade since early January, and just off a 1-year high of 93.78 Yen. Market players believe that if the U.S. currency can break through the 1-year peak, it may even rise to 95.00 Yen. The thinking among investors is that the Japanese central bank will not raise interest rates in the near term, especially given Japan’s deflationary trend. That and higher yields in U.S. Treasury notes might explain the recent weakness of the Japanese Yen, say some investors.
The common currency Euro moved up against the Japanese Yen, as well, with higher regional shares prompting short-term investors to buy the higher-risk currency. At one point in the morning Tokyo session, the Euro was trading at 126.62 Yen, the highest trade in nearly 2 months. Some investors believe that the Euro may rise to 127.00 Yen during the trading day, as institutional investors in Japan show that they are more than willing to buy non-Japanese assets.