Yen falls to fresh 11-month low against dollar, focus on intervention risks
LONDON — The dollar rose against the yen to an almost 11-month high on Monday following last week's gains, keeping traders focused on Japan intervention risks.
The yen fell 0.17% to 148.66 per dollar, touching its lowest since late October and adding to Friday's declines after the BOJ maintained ultra-low interest rates, while Governor Kazuo Ueda stressed the need to spend more time assessing data before raising interest rates.
The Japanese currency 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.
«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.
A yen overshooting would be seen by many as a catalyst for renewed interventions to strengthen the Japanese currency, 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 0.06% higher.
Last week, the Federal Reserve kept rates on hold at its policy meeting, but surprised markets by signalling U.S.
rates would need to stay higher for longer than expected.
On Friday, Fed officials warned of further rate hikes ahead. Markets now see a 25% chance of a 25-basis-point increase at November's meeting.
Elsewhere, the Swedish crown jumped to an almost seven-week high, up 1% against the euro to 11,7300.
Nick Rees, FX market analyst
