“The Bank of Japan has given the go-ahead to continue selling the yen,” said Lee Hardman, a currency analyst at MUFG Bank in London. The market had speculated that the Bank of Japan might take a step back, given the pressure it is exerting on currency markets.
A Finance Ministry official responded that Japan will take appropriate action in foreign exchange markets, calling the recent moves “extremely worrying.”
The JPY yen last traded at 131.24, the lowest value since April 2002, and the dollar was up more than 2% against the Japanese currency on the day.
Given the weakness of the yen, the dollar catapulted to its highest level since December 2002 against a basket of currencies.
“The greenback was seen on expectations that the Federal Reserve will raise interest rates faster than its peers and likely widen the yield gap between US and Japanese government bonds (JGBs)],” they said. operators.
“This dollar/yen move has been mainly due to the widening of the long-term spread between US Treasuries and JGBs,” said Bipan Rai, North American head of currency strategy at CIBC Capital Markets in Toronto.
The dollar index last traded at 103.73, up 0.74%, after hitting a high of 103.93.
The dollar trimmed gains after data showed the US economy unexpectedly contracted in the first quarter as a resurgence in Covid-19 cases disrupted activity.
In the meantime, The euro fell below the psychological level of $1.05 as investors remained nervous about the possibility of Russia cutting off gas supplies. to parts of the region for refusing to pay in rubles.
The impact in Argentina
Last week Jerome Powell, president of the United States Federal Reserve (Fed), announced that a new rise in interest rates and American bonds is coming in the first week of May.
As a consequence, investors return to positioning themselves in dollars, a phenomenon known in the market as “fly to quality”. The effect hits Argentina.