Dollar stable, yen near its lowest in decades

by Jonathan Adams
Dollar wobbles

The yen was last at 151.585 per dollar, staying near last month’s slump to 34-year lows of 151.975 in the wake of the BOJ’s historic policy shift

The dollar was on the front foot on Wednesday, pinning the yen near its lowest in decades though the heightened possibility of currency intervention by Tokyo capped further drops in the Japanese currency.

The yuan was stable after a private-sector survey showed that China’s services activity growth accelerated in March, in a sign sentiment was staging a tentative recovery in the world’s second-biggest economy.

The yen was last at 151.585 per dollar, staying near last month’s slump to 34-year lows of 151.975 in the wake of the BOJ’s historic policy shift.

While the Bank of Japan raised rates for the first time in 17 years, policymakers’ commitment to go slow on more hikes have hammered the yen especially given the still-wide Japan-U.S. yield gap.

Japanese officials have continued with their jawboning efforts for days now in an attempt to defend the currency, with the looming threat of an intervention serving as strong resistance for the dollar at the 152 yen level, which some market participants see as a line in the sand.

Any direct response to yen depreciation is more likely to come from the Ministry of Finance, said Morgan Stanley MUFG Securities strategist Koichi Sugisaki in a note.

Sugisaki said: We would not expect any unilateral JPY-supportive intervention to trigger more than a temporary decline in USD/JPY given that such action would say nothing about the future direction of monetary policy. That said, we do see potential for intervention to trigger sharper-than-usual declines.

Elsewhere, the euro advanced 0.02% to $1.0772, standing some distance away from a more than one-month low touched in the earlier session, after the U.S. dollar ran into some profit-taking late overnight.

Sterling slid 0.08% to $1.25675.

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