Yen Swings After Hitting New 34-year Low, Stocks Rally

The yen swung wildly Monday as it surged soon after hitting a fresh 34-year low against the dollar, fuelling speculation that Japanese authorities may have intervened to support the currency for the first time since late 2022

Hong Kong, (UrduPoint / Pakistan Point News - 29th Apr, 2024) The yen swung wildly Monday as it surged soon after hitting a fresh 34-year low against the dollar, fuelling speculation that Japanese authorities may have intervened to support the currency for the first time since late 2022.

The dollar's rally came as another forecast-topping US inflation report dented hopes for Federal Reserve interest rate cuts this year.

The yen slipped to 160.17 to the greenback in volatile morning trade, with liquidity thin amid a holiday in Japan. The fall stirred speculation that authorities would intervene to arrest its slide.

It later bounced back to 155.05, and Bloomberg reported the move suggested investors were weighing the prospect that officials would step in to financial markets.

"I have no comment at this time," Masato Kanda, Japan's vice minister of finance for international affairs, told reporters at the ministry after the yen's sudden rise.

The stock market in Japan was closed Monday for a national holiday.

But some analysts speculated that Japan stepped in to boost the yen.

"The Japanese Ministry of Finance is believed to have intervened in the currency markets, yet the impact was only temporary," said Stephen Innes of SPI Asset Management.

The currency has come under renewed pressure after the Bank of Japan refused to tighten monetary policy further at its meeting last week.

Officials have repeatedly said they are ready to step in if there are wild movements in the exchange rate, citing speculators as a key issue.

However, observers were sceptical that an intervention would have much of an impact.

"Expectations of intervention having a sustained impact may disappoint given macro fundamentals do not support a sudden shift to a hawkish monetary stance," said National Australia Bank's Tapas Strickland.

Lombard Odier's Homin Lee added: "Pressures will remain on the currency until we get more downbeat growth and inflation data in the US and clearer hawkish shift at the BoJ.

"We still think we are quite close to the Finance Ministry's intervention, in light of the recent rhetoric on excessive currency market moves."

Equity markets rose following a rally on Wall Street as strong earnings offset the hotter print on the personal consumption expenditures (PCE) price index.

A rally in tech titans -- boosted by forecast-beating reports from Microsoft and Alphabet -- helped push all three main indexes higher in New York, with the Nasdaq piling on two percent.

The readings soothed worries that the recent markets rally, which has been partly fanned by optimism over earnings, may have been overdone.

The advance in the PCE followed a third straight jump in the consumer price index.