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Text by News Wires

Latest update : 2010-08-24

The yen rose to its highest level in 15 years against the dollar on Tuesday, after Japan's government failed to announce decisive action to help the country's export-driven economy.

AFP - The yen rose to a fresh 15-year high against the dollar on Tuesday, as fears for the global economy and a lack of concrete action from Japan over its strong currency bolstered yen demand. 
The greenback slid to 84.34 yen in Tokyo trading hours, its lowest level since July 1995.
The euro dipped to its lowest level since November 2001, falling to 106.83 yen in afternoon trade, down from 107.78 in New York late Monday.
The euro fell to 1.2633 dollars from 1.2654.
Growing concern about a slowdown in the United States and weakness in European economies triggered market caution and heightened demand for the safe-haven yen, analysts said.
The strength of the Japanese currency hit domestic shares Tuesday, with the Nikkei index closing below 9,000 points for the first time since May 2009.
The yen also strengthened due to disappointment after Prime Minister Naoto Kan and Bank of Japan governor Masaaki Shirakawa on Monday spoke by phone to discuss the impact of the strong yen without addressing possible intervention.
Markets had anticipated stronger government pressure on the central bank to do more to lift the economy, such as further monetary easing, but no proposals were announced following the conversation.
Mizuho Corporate Bank market economist Daisuke Karakama said many market players expected no immediate action by the Japanese authorities.
"The BoJ hasn't moved. There is (US) employment data next week, which will be followed by its policy meeting. Any action at the moment would be wasted if the employment data turned out to be bad," he said.
Unless there are some surprise comments from Japan's officials, "the yen may continue to gain into the weekend," Mitsuru Sahara, a senior dealer at the Bank of Tokyo-Mitsubishi UFJ, told Dow Jones Newswires.
For every one-yen rise in the currency's value against the dollar, companies can lose tens of billions of yen earned overseas when repatriated, threatening a sector that Japan depends on to offset its weak domestic picture.
The Japanese unit is likely to keep its strength due to "the lack of additional measures to avert the strong yen after the meeting between the premier and the BoJ governor," said Barclays Capital in a client note.
"The impact of the weaker euro against the yen on Japanese exporters would be bigger than that of the weaker dollar against the yen," it added.
On Monday, the purchasing managers' index (PMI), a survey of 4,500 euro area companies compiled by data and research group Markit, fell to 56.1 points from 56.7 in July, when it had accelerated for the first time in three months.
Investors were eyeing US existing homes sales data due later Tuesday, which Barclays Capital analysts said would likely miss market expectations, as well as revisions to second-quarter US gross domestic product due Friday.
However, the dollar rose against regional Asian currencies.
It rose to 1,191.60 South Korean won from 1,182.79 on Monday and to 31.52 Thai baht from 31.33.
The dollar firmed to 45.44 Philippine pesos from 45.02, to 1.3616 Singapore dollars from 1.3549 and to 8,987.00 Indonesian rupiah from 8,970.00.
It edged up to 31.97 Taiwan dollars from 31.93.

Date created : 2010-08-24


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