Strong dollar sends yen to 11-month low, focus on intervention risks
By Joice Alves
LONDON (Reuters) — The dollar rose against the yen to an almost 11-month high on Monday, keeping traders focused on Japan intervention risks after the Bank of Japan and Governor Kazuo Ueda quashed hopes of any imminent move away from its stark ultra-loose monetary policy.
In the broader currency market, the dollar steadied after last week's gains as the Federal Reserve surprised markets by signalling U.S. rates would need to stay higher for longer than initially expected.
The yen was last flat at 148.38 per dollar after falling to its lowest level of 148.49 per dollar since late October. It remained within striking distance of 150, a level which some market watchers saw as a line in the sand that would spur forex intervention from Japanese authorities similar to that of last year.
The Japanese currency had fallen more than 0.5% on Friday after the BOJ maintained ultra-low interest rates, while Governor Ueda stressed the need to spend more time assessing data before raising interest rates.
«According to BoJ governor Kazuo Ueda there was no sign yet of stable inflation on a sustainable basis so that the BoJ will patiently continue with monetary easing under the current framework. That was a clear dampener for the yen,» said Esther Reichelt, FX analyst at Commerzbank (ETR:CBKG).
An overshooting to 148.50 would have been seen by many as a catalyst for renewed interventions to strengthen the yen, similarly to last year, she added.
«It is possible of course that exactly such fears of interventions might have prevented a weaker yen for now».
The dollar index, which on Friday touched an over six-month high, firmed at 105.64 and was last 0.1% higher.
Fed officials had on Friday warned of further rate hikes ahead
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