Dollar weakening to a 14-year low against Yen
To surprise the investors on the Thanksgiving Day, the dollar reaches a 14-year low against the yen and hits an 18 months low on the Swiss Franc, extending its broad slide on resulted from the extremely low U.S. interest rates. The dollar index also hit a 15-month low.
Officials around the world have expressed worry about the dollar’s fall, and U.S. officials have tried but failed to reassure investors they believe in a stronger currency.
Japan signaled no plans to step in to stem the yen’s rise. Japanese deputy finance minister claimed that the currency moves reflected dollar weakness and Japan wasn’t considering intervening now while Finance Minister said the move was at the stage where they should watch.
Traders have doubted Japanese authorities, once known for their heavy dollar-buying interventions, would step in at this stage to break the fall because the dollar’s drop was against a range of currencies, and the yen’s trade-weighted gains have not been so sharp.
It’s dollar weakening, not yen strengthening, so there’s very little Japanese authorities can do to stop the trend. Even if they intervened in the market, the effect will be short-lived. Intervention will be extremely hard to justify.
The yen’s climb against the dollar this year has been painful for the country’s exporters’ earnings. But Japan has stayed away from intervention for more than six years, and officials have repeatedly expressed a reluctance to do so.
The dollar fell more than 1 percent on the day to 86.29 yen, its weakest level since 1995. Investors were not expecting a drop towards 85 yen in the near term and were even thinking of a retreat towards the all-time low of 79.75 yen touched in 1995.
The yen also jumped on the crosses, with the euro dropping more than 1 percent to its lowest in a month at 129.98 yen and the Australian and New Zealand dollars falling 2 percent on the day.
Analysts said there were few reasons to buy the yen for itself but it was hard to stand in the way of dollar selling momentum, although selling was starting to look stretched.
