The yen traded 0.2 percent from a five-year low against the dollar as the Bank of Japan continues unprecedented easing while the U.S. Federal Reserve begins to pare stimulus.
The yen fell 0.2 percent to 104.44 per dollar as of 4:12 p.m. in Tokyo from yesterday. It reached 104.64 on Dec. 20, the weakest since October 2008. Japan’s currency fell 0.1 percent to 142.82 per euro, near the five-year low of 142.90 touched last week. Europe’s shared currency was little changed at $1.3676.
The Nikkei 225 Stock Average (NKY) closed above 16,000 for the first time in six years, reducing demand for the yen as a haven. The dollar held a gain from yesterday against most of its major peers after U.S. reports showed orders for durable goods and new-home sales rose more than forecast.
Australia’s currency gained for a fifth session against its New Zealand counterpart while the Chinese Yuan was little changed at 6.0711 per dollar, near the strongest in 20 years. The Thai baht traded at 32.76 per dollar after touching a three-year low of 32.81 yesterday amid concern political unrest will continue.
2013
The yen has tumbled 15 percent this year, the most among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has gained 4.1 percent, while the euro has been the best performer, jumping 8.3 percent.
Japan’s central bank is buying more than 7 trillion yen ($67 billion) of government bonds each month in an attempt to end 15 years of deflation. BOJ officials see significant scope to boost bond purchases if necessary to achieve their 2 percent inflation target.
At the same time, Fed Tapering should see a cut in monthly asset purchases in January from $85 billion to $75 billion, while reinforcing its assurance that interest rates will remain low for an extended period.