The US dollar rose to new 34-year highs in Tokyo in the upper 155 yen range on Thursday, as currency traders tested the limits of the yen’s weakness amid speculation that a market intervention by Japanese authorities is still a way off.
Recent firmer-than-expected US economic data has reduced trader bets that the Federal Reserve will soon cut interest rates, suggesting a continuation of the wide interest rate differential between Japan and the United States that has sent the yen to as low as around 155.73 yen .
At 3 pm, the dollar fetched 155.65-68 yen compared with 155.28-38 yen in New York and 154.89-91 yen in Tokyo at 5 pm Wednesday.
The euro was quoted at $1.0711-0715 and 166.72-81 yen against $1.0693-0703 and 166.13-23 yen in New York and $1.0687-0689 and 165.54-58 yen in Tokyo late Wednesday afternoon.
A financial data monitor in Tokyo on April 25, 2024, shows the US dollar trading in the 155 yen range after hitting a 34-year high. (Kyodo) ==Kyodo
The US currency crossed into the psychologically significant 155 yen range on Wednesday night after Japanese markets closed. The level is widely seen as a red line for a potential intervention by Japanese authorities to stem the yen’s weakness.
But while Finance Minister Shunichi Suzuki has given multiple verbal warnings about currency volatility in recent days, his remarks Thursday that there is “no change” in the government’s stance of acting appropriately to market developments left players with a feeling some headroom may remain before an intervention , market observers said.
“With no intervention yesterday and the Bank of Japan’s two-day policy meeting ending tomorrow, the market has leaned towards the view that an intervention won’t come today,” said Takuya Kanda, senior researcher at the Gaitame.com Research Institute.
“The dollar is likely to get closer to the 156 yen line as traders seek to test where the limits are,” he added.
On the equities market, the Nikkei benchmark index sank over 2 percent as investors locked in strong gains from a day earlier and reacted to disappointing earnings projections from Japanese blue chip companies.
The 225-issue Nikkei Stock Average ended down 831.60 points, or 2.16 percent, from Wednesday at 37,628.48. The broader Topix index finished 47.20 points, or 1.74 percent, lower at 2,663.53.
On the top-tier Prime Market, decliners were led by electric power and gas, mining and transportation equipment issues.
“Investor concerns over the latest earnings season have been raised by recent results,” said Toshikazu Horiuchi, equity strategist at IwaiCosmo Securities Co.
Shares sold heavily included machinery maker Fanuc Corp., which said Wednesday it projects net profit for the current fiscal year will drop 19.4 percent from the previous year.
Elsewhere, heavyweight semiconductor-related issues declined on weak Nasdaq index futures, analysts said.
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