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Dollar steadies versus yen after recent plunge

August 26, 2010

The dollar steadied against the yen Thursday on speculation authorities may intervene in markets to check the strong Japanese currency, which this week shot to a 15-year high against the greenback.

In trade here, the dollar eased to 84.53 yen from 84.59 late in New York on Wednesday.

The euro climbed to 107.42 yen from 107.01 yen late on Wednesday. It also rose to 1.2707 dollars from 1.2655.

Japanese officials have been under pressure to show concrete plans to act against the strength of the yen, which threatens the country's exporters. The market has however drawn comfort from comments by Finance Minister Yoshihiko Noda.

"The yen has stabilised somewhat after Noda stated he would respond to adverse yen moves in an appropriate fashion, whatever that means, as currency traders took some profit," said CMC Markets analyst Michael Hewson.

Bank of Japan governor Masaaki Shirakawa leaves for the United States on Thursday to attend a financial symposium while Noda heads to China at the weekend for economic talks.

"The yen was unable to build on its recent gains to new 15-year highs on concern that when Bank of Japan governor Shirakawa visits Jackson Hole this week, and the Federal Reserve's annual symposium, he may come back and initiate further measures to try and weaken the yen," added Hewson.

On Tuesday, the dollar slumped to 83.61 yen -- a level last seen in June 1995. At the same time, the euro struck 105.44 yen -- the lowest point since July 2001.

"The Japanese government is carefully turning up the volume of its verbal interventions," noted Commerzbank analyst Ulrich Leuchtmann.

"Prime Minister Naoto Kan made it clear that the government is thinking about interventions. And it has every reason to do so."

Investors were also cautious ahead of a speech this Friday from US Federal Reserve chairman Ben Bernanke. Before then, traders will focus on weekly US jobless claims data due Thursday.

In London trade on Thursday, the euro changed hands at 1.2707 dollars against 1.2655 dollars on Wednesday, at 107.42 yen (107.01), 0.8177 pounds (0.8187) and 1.3065 Swiss francs (1.3038).

The dollar stood at 84.53 yen (84.59) and 1.0282 Swiss francs (1.0303).

The pound was at 1.5538 dollars (1.5452).

On the London Bullion Market, the price of gold rose to 1,241.55 dollars an ounce from 1,237.50 dollars an ounce on Wednesday.


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