Dollar extends fall as yen hits five-month high

Dollar extends fall as yen hits five-month high
(Updates quotes, table, prices)
By Kate Duguid
NEW YORK, Feb 13 (Reuters) - The Japanese yen rose to a
five-month high on Tuesday on the back of broad-based selling of
the dollar and speculation the Bank of Japan could be close to
dialing back record levels of monetary stimulus.
The yen has gained 1.5 percent against the dollar
this month, benefiting last week from a rush by investors into
currencies deemed safer amid the rout in equity markets.
But while risk appetite has recovered this week, investors
have continued to sell dollars and buy yen. The dollar was down
more than half a percent against a basket of six currencies at a
session low of 89.61, reversing some of its gains last
week, when it enjoyed its best performance since 2016.
"A lot of people in the market are expecting the yen to
rise, because a turnaround in BoJ monetary policy has not been
priced in," Ulrich Leuchtmann, a Frankfurt-based analyst at
Commerzbank said.
This helps explain the move, even though there is not
consensus that the BoJ will follow other central banks in
gradually ending the era of easy money soon.
"I don’t buy it," said John Doyle, vice president of dealing
and trading at Tempus Inc in Washington. "Last Friday we saw
that (BoJ) Governor Kuroda will be reappointed for five more
years, and that’s a signal to us that business will continue on
as usual," Doyle continued.
Douglas Borthwick, head of foreign exchange at Chapdelaine
FX in New York, proposed a different explanation for the
dollar/yen move on Tuesday: "Japan floated a rules change
yesterday in the Nikkei newspaper that they want to reduce the
leverage (on forex trading) that can be used by investors."
"This margin news may be the Japanese government warning
retail investors that there’s no longer a one-way bet on
dollar/yen," said Borthwick.
If Japanese investors have to reduce the leverage that they
have outstanding, they will have to sell dollars and buy yen,
which in turn lowers the dollar/yen.
The yen rose as much as 1.1 percent to 107.4 per dollar,
close to the high it hit in September at 107.32 yen. If the yen
breaks through that, it will hit its best level since late 2016.
Prospects of higher inflation globally have rattled
investors this month and have helped drive equity market falls.
Investors will be closely watching the release of U.S. consumer
price index data on Wednesday for signs of inflation.
Elsewhere, the euro rose to a daily high of $1.237,
up 0.65 percent, as gains in global equity markets encouraged
traders to sell the dollar and tiptoe back into riskier assets.

Currency bid prices at 3:52PM (2052 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Euro/Dollar EUR= $1.2357 $1.2291 +0.54% +0.00% +1.2371 +1.2285
Dollar/Yen JPY= 107.7800 108.6400 -0.79% +0.00% +108.7700 +107.4100
Euro/Yen EURJPY= 133.20 133.54 -0.25% +0.00% +133.7800 +132.5300
Dollar/Swiss CHF= 0.9351 0.9390 -0.42% +0.00% +0.9398 +0.9323
Sterling/Dollar GBP= 1.3885 1.3835 +0.36% +0.00% +1.3923 +1.3833
Dollar/Canadian CAD= 1.2594 1.2573 +0.17% +0.00% +1.2625 +1.2566
Australian/Doll AUD= 0.7858 0.7858 +0.00% +0.00% +0.7876 +0.7828
Euro/Swiss EURCHF= 1.1557 1.1543 +0.12% +0.00% +1.1562 +1.1509
Euro/Sterling EURGBP= 0.8897 0.8881 +0.18% +0.00% +0.8910 +0.8859
NZ Dollar/Dolar NZD= 0.7276 0.7262 +0.19% +0.00% +0.7314 +0.7248
Dollar/Norway NOK= 7.8694 7.9120 -0.54% +0.00% +7.9188 +7.8656
Euro/Norway EURNOK= 9.7257 9.7257 +0.00% +0.00% +9.7638 +9.7106
Dollar/Sweden SEK= 8.0239 8.0629 +0.06% +0.00% +8.0695 +8.0210
Euro/Sweden EURSEK= 9.9181 9.9120 +0.06% +0.00% +9.9494 +9.9090

(Reporting by Kate Duguid and Tommy Wilkes; Editing by Andrea
Ricci and Jonathan Oatis)

First Published: 2018-02-13 03:17:26
Updated 2018-02-13 23:03:26

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