USA Dollar

Dollar at upper 155 yen after Fed chief remark, possible intervention

The U.S. dollar was weak in the upper 155 yen zone Thursday morning in Tokyo after the chief of the U.S. Federal Reserve said it is unlikely to raise interest rates, while another suspected yen-buying intervention by Japan also pushed the yen higher.

The U.S. currency briefly fell to 153.00 yen overnight from the upper 157 yen range, following what was believed to be a yen-buying, dollar-selling operation by Japan to halt the yen’s decline.

Japanese authorities are believed to have conducted an intervention on Monday after the dollar topped 160 yen at a fresh 34-year high.

A screen in Tokyo shows financial data during morning trading on May 2, 2024. (Kyodo)

The dollar’s latest plunge came after the Fed decided to keep its benchmark interest rate intact, as widely expected by the market, while Fed Chair Jerome Powell dismissed speculation about another possible rate hike amid persistent inflation, saying, “I think it’s unlikely that the next policy rate move will be a hike.”

“The remarks were seen as relatively dovish compared to what was expected,” leading to the dollar’s decline, said Masafumi Yamamoto, chief currency strategist at Mizuho Securities Co., adding that a likely yen-buying intervention caused the dollar to weaken further against the yen.

“While there is a possibility that authorities could step in again (for a third time), much is dependent on upcoming U.S. economic data, including the unemployment data” on Friday, he said, noting there is a likelihood of intervention if the dollar tops 157 yen.

After hitting 153 yen, the dollar regained some strength in Tokyo amid buying by Japanese importers, dealers said.

At noon, the dollar fetched 155.82-83 yen compared with 154.55-65 yen in New York and 157.88-90 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.0717-0721 and 166.99-167.07 yen against $1.0708-0718 and 165.44-54 yen in New York and $1.0661-0662 and 168.32-36 yen in Tokyo late Wednesday afternoon.

Tokyo stocks ended the morning slightly higher as firm U.S. stock futures helped erase earlier losses, while investors also sought bargains as the benchmark Nikkei index neared the 38,000 threshold, analysts said.

The 225-issue Nikkei Stock Average rose 25.66 points, or 0.07 percent, from Wednesday to 38,299.71. The broader Topix index was up 2.93 points, or 0.11 percent, at 2,732.33.

Related coverage:

With or without official word on intervention, weak yen may persist

Japan likely conducted forex intervention worth around 5 tril. yen

BOJ’s March minutes show no urgency to raise rates further

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