Oil weakens yen

Story link: Oil weakens yen

In Japan on Monday, the yen was down a fraction in relation to the US dollar and sterling.

Rising oil prices had a lot to do with the weakness of the yen as analysts fear that higher oil prices will diminish Japan’s trade surplus.

The continuing saga of Chinese revaluation was also a factor as the Chinese premier, Wen Jiabao said that “undue haste” to revalue the renminbi should be avoided.

The yen stood at ¥109.38 in against the dollar and at ¥199.63 in relation to sterling.

Meanwhile, board members of the European Central Bank on Monday once again said that current interest rates in the eurozone are “appropriate” and that rate cuts would not be forthcoming despite continuing rumors to the contrary.

One board member said that lower rates could be “damaging” because they could cause property price inflation.

Additionally, a survey of business confidence in Germany revealed a rise to 93.3 in June, up from 92.90 in May.

It was the first rise in business confidence after four declines in a row. This let the euro to advance in relation to the US dollar, the yen, and sterling.

The euro advanced 0.5 percent against the dollar, to $1.2149, it rose 0.6 percent in relation to the yen to ¥132.89, and advanced 0.4 percent to £0.6657 against sterling.

Elsewhere in Europe, the Polish zloty declined 1.2 percent against the euro to 4.0664 zlotys ahead of an expected cut in the interest rate tomorrow. It will be the third rate cut in Poland this year, where the interest rate currently stands at 5.5 percent.