Tags: yen | bank of japan | weak | kuroda

Yen Soars After BoJ's Kuroda Says Currency 'Very Weak'

Wednesday, 10 Jun 2015 08:43 AM

The yen surged to a two-week high against the dollar on Wednesday after the head of the Bank of Japan said the currency was unlikely to fall further because it was already "very weak," prompting investors to trim huge bets against it.

As oil prices jumped on a report that U.S. oil production was leveling off after years of sharp increases, commodity currencies such as the Canadian and Australian dollars soared by over 1 percent against their U.S. counterpart.

BoJ Governor Haruhiko Kuroda, who was speaking to a Japanese lower house financial affairs committee, rescued the yen from close to last week's 13-year trough of 125.86 per dollar to a high of 122.46 yen.

Analysts said the comments from BoJ Governor Haruhiko Kuroda, who was speaking to a lower house financial affairs committee, suggested that the Japan may have started the long process of preparing the market for a time when the economy will need less monetary stimulus.

But the yen later pared some of its earlier gains after Japan's Economy Minister Akira Amari said the currency market seemed to have misinterpreted the Kuroda's remarks. The dollar last stood at 123.08 yen, still down over 1 percent on the day.

"Kuroda is not stupid. The fact that he said that — I would imagine there was a bit of a team play here," said Ian Gunner, manager of the Altana Hard Currency Fund in London.

"Clearly Kuroda was looking at the real effective exchange rate and his comments reflected the fact that it's back to where it was before the Lehman crisis. That, as an observation, is matter of fact, but ... the market latched onto ... the fact that he said he couldn't imagine it moving beyond that."

Hit by the yen's advance and rallying commodity currencies, the dollar slipped to a three-week low against a basket of major currencies of 94.322. After Amari's comments, the greenback recovering a touch to 94.898, still down 0.3 percent on the day.

"It looks like in the G7 meeting there was a lot of conversation about the speed of the dollar's rise as the Fed begins normalizing policy later this year," BMO Capital Markets' European head of FX policy, Stephen Gallo, said.

Earlier, Kuroda had told Japanese lawmakers that the dollar may not necessarily rise versus the yen if the Federal Reserve raises interest rates as traders may have already priced the possibility of a rate hike into the market.

The Canadian dollar gained 1 percent against its U.S. counterpart to hit a three-week high of C$1.2217, before retreating a little to C$1.2261 as the U.S. dollar strengthened. The Australian dollar also rose as much as 1 percent to $0.7785.

© 2017 Thomson/Reuters. All rights reserved.

 
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The yen surged to a two-week high against the dollar on Wednesday after the head of the Bank of Japan said the currency was unlikely to fall further because it was already very weak, prompting investors to trim huge bets against it.
yen, bank of japan, weak, kuroda
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2015-43-10
Wednesday, 10 Jun 2015 08:43 AM
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