U.S. Dollar Nears 15-year Low versus Yen on Non-intervention by Bank of Japan

By: Barbara Zigah

The U.S. Dollar approached a 15-year trough versus the Japanese Yen in Asian trading today on investor speculation that the Japan central bank would not yet intervene. As reported at 3:10 p.m. (JST) in Tokyo, the U.S. Dollar slipped to 83.60 Yen, a decline of .3% and approaching 83.34 Yen, the 15-year low struck Wednesday on the EBS trading platform.

In late Wednesday trading, many traders believed that intervention by the Japanese authorities was in the cards as bank officials had allegedly been checking interest rates, a move which prompted the speculation among traders. However, because there has been no further action on the part of the Bank of Japan, aside from a comment by Yoshihiko Noda, the Finance Minister of Japan that the ministry had been conducting forex intervention simulations, traders are selling off their U.S. Dollar holdings. According to one forex trader at BNP Paribas, the greenback will continue to be under pressure on investor concerns that economic growth in the United States might stagnate while interest rates drop, a phenomenon coined as “Japanization” of the American economy.

The Australian Dollar struck a 4-month peak versus the U.S. Dollar following the release of positive job data, which boosted investor expectation that another interest rate increase would be forthcoming. As reported in Tokyo, the Australian Dollar traded against the greenback at $0.9237, a 4-month peak.