The yen weakened to a five-year low versus the dollar amid speculation the Bank of Japan will continue unprecedented stimulus while the Federal Reserve pares quantitative easing as the U.S. economy recovers.
Japan’s currency fell for a fourth day before the U.S. announces jobless claims today and after minutes of the Bank of Japan’s meeting last month showed one board member said a slowdown in growth could represent a downward shift in trend. The yen also slid to a five-year low versus the euro as the Nikkei 225 Stock Average (NKY) extended gains after yesterday closing above 16,000 for the first time in six years. Australia’s dollar held a five-day rally against its New Zealand counterpart.
“The fact that BOJ members are concerned that improvement in growth, jobs, and consumer prices may not be as robust as before signals they will take some kind of measures going forward,” said Takahiro Sekido, who previously worked at the BOJ before joining Bank of Tokyo-Mitsubishi UFJ Ltd. as a Japan strategist. “Dollar-yen could test 105 as economic data in the U.S. continue to improve.”
The yen fell 0.4 percent to 104.84 per dollar as of 10 a.m. in Tokyo from yesterday, the weakest level since October 2008. Japan’s currency dropped 0.4 percent to 143.32 per euro, after sliding to a five-year low of 143.37. The shared currency was little changed at $1.3672.
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