Home Forex News Dollar dips as Japan and China fortify their currencies

Dollar dips as Japan and China fortify their currencies


Dollar dips as Japan and China fortify their currencies By Reuters

Breaking News



Published Mar 24, 2024 09:02PM ET
Updated Mar 25, 2024 08:20AM ET

© Reuters. A trader counts U.S. dollar banknotes at a currency exchange booth in Peshawar, Pakistan January 25, 2023. REUTERS/Fayaz Aziz

By Harry Robertson and Rae Wee

LONDON/SINGAPORE (Reuters) -The dollar slipped on Monday, with the threat of currency intervention from Japanese authorities and a government-driven rally in China’s yuan weighing on the U.S. currency.

The Japanese yen was around 0.1% higher and last stood at 151.29 per dollar, having bottomed at a four-month trough of 151.86 last week that left it within striking distance of a 32-year low near 152 per dollar hit in 2022.

A rise in the yen helped push the dollar index down 0.16% to 104.26, after a weekly gain of nearly 1% last week.

Japan’s top currency diplomat said on Monday the yen’s weakness did not reflect fundamentals, adding to the rhetoric of government officials who have stepped up warnings in recent days over the currency’s decline.

The yen has dropped despite the Bank of Japan hiking interest rates out of negative territory last week. Traders think rates in Japan will remain low for some time and therefore the big interest rate gap with the U.S. will stay in place, boosting the appeal of the dollar.

“Japanese officials’ verbal intervention is making 152 a very strong near-term resistance for dollar/yen,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia (OTC:CMWAY). “I think that’s keeping dollar/yen from moving substantially higher.”

China’s yuan found some strength on Monday, climbing roughly 0.2% in onshore markets to 7.21 to the dollar, while its offshore counterpart rose around 0.4%.

Sources told Reuters that China’s major state-owned banks were seen to be selling dollars for yuan in onshore markets on Monday, helping reverse a sudden fall at the end of last week.

The Chinese currency has been pressured by growing market expectations of further monetary easing to prop up the world’s second-largest economy.

“The support to the renminbi (yuan) has helped to limit Friday’s advance of the dollar, as has some quite aggressive verbal intervention in support of the yen from Japanese officials,” said Chris Turner, global head of markets at ING.

European currencies regained some ground on Monday, after dropping last week as investors bought the dollar on the basis that the Federal Reserve seems in no rush to ease rates compared to some of its peers.

The euro was last up 0.19% at $1.0828, climbing off a near three-week low. Sterling rose 0.31% to $1.264, having slid more than 1% last week.

Bets for a June rate cut by the European Central Bank and the Bank of England (BoE) have risen substantially after the Swiss National Bank became the first major central bank to lower borrowing costs last week and BoE Governor Andrew Bailey told the Financial Times that rate cuts “were in play” this year.

Elsewhere, the Australian dollar rose 0.31% to $0.6535.

Bitcoin climbed 5.4% to $66,900. It has fallen around 9% since hitting a record high above $73,800 on March 14.

Dollar dips as Japan and China fortify their currencies

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News