The Japanese yen hovered near a two-week low on Wednesday as the government nominated two academics perceived as willing to tolerate higher inflation to stimulate growth to join the Bank of Japan board. The yen was last at 155.77 per dollar, having dropped 0.8% overnight to 156.28.
“According to the report yesterday, Takaichi-san looks to be negative on higher policy rates and then she chose at least one super-dovish member,” said Tohru Sasaki, chief strategist at Fukuoka Financial Group and former BOJ official, referring to Ayano Sato. “These choices reflect the reflationist tendencies of the Takaichi cabinet.”
Elsewhere in Asia, the Australian dollar surged 0.7% to $0.7109 after a stronger-than-expected inflation reading raised the prospect of additional rate hikes. The New Zealand dollar edged higher to $0.5983, while sterling and the euro posted smaller gains, leaving the dollar at $1.3520 against the pound and $1.1796 against the euro.
China’s yuan extended sharp gains to an almost three-year peak of 6.8703, supported by the U.S. Supreme Court striking down major tariffs and strong export performance. “The fundamental underpinnings for our CNY appreciation view – a starting point of deep currency undervaluation and the remarkable strength of the export sector – remain very much in place,” said analysts at Goldman Sachs.
The yen has been under pressure for years due to Japan’s low interest rates, with concerns over fiscal strain intensifying after Prime Minister Sanae Takaichi took office in October.
Reuters
