The resurgent U.S. dollar has trumped most major currencies in its march higher, not least the Japanese yen, whose recent slide against the greenback is raising policymakers’ eyebrows.
The dollar-yen spiked to a six-year high of 106.33 on Tuesday. The move triggered warnings by Finance Minister Taro Aso and Economics Minister Akira Amari, who cautioned that further sharp declines in the currency are not desirable.
The yen’s near-term outlook hinges on the direction of the U.S. dollar, say analysts, who expect further downside. The greenback has stormed higher on a strengthening American economy and the prospect of higher U.S. interest rates as the Federal Reserve unwinds its easy monetary policy. The dollar index is up 5.2 percent so far this year.
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