FOREX-US Dollar Soars to 20-Year High Against Yen on Fed-BOJ Policy Difference

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Band Gertrude Chavez-Dreyfuss

NEW YORK, April 19 (Reuters)The dollar jumped to a 20-year high against the Japanese yen on Tuesday, buoyed by the divergence in monetary policy between a Federal Reserve determined to contain soaring inflation and a Bank of Japan that kept interest rates on hold. extremely low.

The greenback reached 128.97 yen JPY=, the highest since May 2002. It was last up 1.5% at 128.94 yen. The dollar has risen 5.9% against the yen so far this month, the pace of the biggest monthly percentage rise since 2016.

“The BOJ has done the opposite of normalization. It has sunk in,” said Richard Benson, co-chief investment officer at Millennium Global Investments in London.

Benson thinks that the Japanese monetary authorities could indeed intervene to strengthen the yen, but this is not a particular level.

“I wouldn’t be surprised if the BOJ steps in because they have a lot of dollars and they can just sell them easily,” Benson said. “There are obvious numbers to tackle and levels, but the narrative is much more about speed than level. So slow and gradual is fine.”

Japanese Finance Minister Shunichi Suzuki issued the most explicit warning of the yen’s recent fall on Tuesday, saying the damage to the economy from the weakening currency currently outweighs the benefits. ensue.

Morgan Stanley, in its latest research note, said the yen’s decline against the dollar was warranted amid deteriorating terms of trade in Japan, with soaring commodities pushing up import costs, as well as contrasting inflation prospects between countries.

While Japan’s core consumer price index (CPI) data, to be released on Thursday, likely rose 0.8% in March from a year earlier, faster than a gain of 0.6% in February, the level is still well below the BOJ’s long-standing inflation target. by 2%.

The dollar index =USD, which measures the greenback against six other currencies, also climbed on Tuesday, topping 101 for the first time in more than two years. It was up 0.2% at 100.98.

The continued rise in US yields provides a boost to the dollar. Benchmark 10-year US Treasury yields hit 2.93% US10YT=RR Tuesday, the highest since December 2018, while yields on US 10-year inflation-linked bonds US10YTIP=RR rose to -0.01%, on the verge of turning positive for the first time in two years.

Chicago Federal Reserve Chairman Charles Evans, who is not a voter on this year’s Federal Open Market Committee, said on Tuesday he was “comfortable” with a series of rate hikes. this year which includes two increases of 50 basis points and reaches a neutral framework. by the end of the year, but he sees no need for larger increases.

Evans joins a chorus of Fed speakers pushing for accelerated rate increases.

The greenback rose to 0.9519 francs against the Swiss currency, the highest since June 2020 CHF=EBS. It last changed hands at 0.9513 francs, up 0.7%.

euro EUR= recovered ground, trading 0.1% higher against the dollar at $1.0791, but remained just below last week’s two-year low at $1.0756.

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Bid rates for currencies at 3:32 p.m. (1932 GMT)

The description

RIC

Last

Closing of the previous session

Percentage change

Percentage change since the beginning of the year

High bid

Low bid

dollar index

=USD

100.9800

100.8100

+0.19%

5.558%

+101.0200

+100.6900

euro dollar

EUR=EBS

$1.0785

$1.0781

+0.04%

-5.13%

+$1.0815

+$1.0762

dollar/yen

JPY=EBS

128.9250

126.9850

+1.51%

+11.97%

+128.9350

+126.9800

Euro/Yen

EURJPY=

139.05

136.92

+1.56%

+6.70%

+139.0800

+136.8800

Dollar/Swiss

CHF=EBS

0.9517

0.9448

+0.70%

+4.30%

+0.9519

+0.9434

British pound/dollar

GBP=D3

$1.2998

$1.3011

-0.11%

-3.90%

+$1.3040

+$1.2981

Canadian dollar

CAD=D3

1.2620

1.2608

+0.13%

-0.15%

+1.2646

+1.2569

Australian/Dollar

AUD=D3

$0.7376

$0.7353

+0.30%

+1.46%

+$0.7400

+$0.7346

Euro/Switzerland

EURCHF=

1.0265

1.0184

+0.80%

-1.00%

+1.0268

+1.0182

Euro/pound sterling

EURGBP=

0.8296

0.8282

+0.17%

-1.24%

+0.8314

+0.8280

New Zealand Dollar/Dollar

USD=D3

$0.6732

$0.6730

+0.04%

-1.64%

+$0.6764

+$0.6720

Dollar/Norway

NOK=D3

8.8390

8.8605

-0.23%

+0.35%

+8.8660

+8.7955

Euro/Norway

EURNOK=

9.5367

9.5584

-0.23%

-4.76%

+9.5615

+9.4940

Dollar/Sweden

SEK=

9.5421

9.5967

-0.52%

+5.81%

+9.6185

+9.5383

Euro/Sweden

EUREK=

10.2924

10.3460

-0.52%

+0.57%

+10.3619

+10.2913

World exchange rateshttps://tmsnrt.rs/2RBWI5E

The dollar appreciates against the yenhttps://tmsnrt.rs/3MdRjNX

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Joice Alves in London and Alun John in Hong Kong; Editing by Gareth Jones, Bernadette Baum, Will Dunham and Andrea Ricci)

((gertrude.chavez@thomsonreuters.com; 646-301-4124))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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