Dollar Touched the Lowest Point Against Yen in 17 Months on Monday
On Monday, American currency hit the lowest point in 17 months against yen. Currency players are the ones who pushed the yen higher, as many of non-Japanese purchase the currency.
In Asian market, dollar dropped to ¥107.63 yen in the early trading. Although dollar regained later to ¥107.82, it has touched the lowest level since October 27 two years ago. Dollar bounced back later after spokesman of Japanese government made a statement.
Chief Cabinet Secretary of Japan Yoshihide Suga reiterated the statement regarding recent gains of yen. The minister said the gains were one-sided and cause by speculative trading. He also said that Japan is prepared to take action against excessive yen movements if necessary.
Neverthless, some remain skeptical that Japan will really intervene in the currency market. Moreover, global leaders have agreed to avoid competitive currency devaluation and Japan will host the summit meeting next month. Director at FX Prime by GMO Marito Ueda told Market Watch, "I don't think Japan can intervene ahead of the summit meeting."
Ueda also said that the current situation is a vicious cycle, which is a combination of weaker stock and higher yen. Those two are pulling each other down.
"It seems some investors won't feel a sense of accomplishment until the dollar touches as low as ¥106 or ¥105," he said further.
Still, The Guardian reported that Japanese finance minister Taro Aso raised a prospect of intervention on the foreign exchange. Especially since the beginning of this year, yen has gained 12% agains dollar and recorded the highest in 16 years.
"A rapid move toward either yen rise or yen fall is not desirable. It is desirable that currencies are stable at levels that match the economy's fundamentals," minister Aso said on Friday.
Furthermore, he added, "As the G20 confirms, excess volatility and disorderly moves in the exchange market hurt (the economy), so we are watching currency moves with a sense of urgency. We will take necessary steps under certain circumstances."
Meanwhile, following the stronger yen, Asian stocks are mixed. CNBC reported that Japan's Nikkei 225 closed down 70.39 points, or 0.44% at 15,751.13, after it retraced its losses of 1.3%. Meanwhile, South Korea's Kospi closed lower 1.68 points, or 0.09% at 1,970.37.
In Hong Kong, Hang Seng wiggled between positive and negative territories before it finally added 70.41 points, or 0.35% at 20,440.81. While China's market remain positive as Shanghai composite index was up or 1.66% reaching 49.63 points to close at 3,034.59, and the Shenzhen composite closed up or 2% or 38.15 points at 1,952.47.