Restricted renminbi revluation hurts yen in weeks trading

Restricted renminbi revluation hurts yen in weeks trading

Story link: Restricted renminbi revluation hurts yen in weeks trading

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The yen’s performance this week put to rest all the speculation about what effect a revaluation of the renminbi would have on the yen.

The Japanese currency was down 2.1 percent to ¥197.37 in relation to sterling, lost 1.5 percent to ¥136.14 against the euro, and fell 0.9 percent to ¥112.24 in relation to the US dollar.

Analysts have given several reasons domestic reasons for the yen’s weakness. Continuing deflation and the zero interest rate have dragged on the value of the yen. In addition, the Japanese currency has been affected by the uncertainty surrounding Prime Minister Junichiro Koizumi and his threat call elections if parliament does not pass his post office reform bill.

But the yen, as well as other Asian currencies, have been hurt by China’s refusal to let its currency appreciate beyond very circumscribed limits in a quest to deny benefit to currency speculators.

A week after revaluation, the renminbi closed on Friday just 0.05 percent stronger than its revalued level of Rmb8.11 to the dollar, as ended the day and the week at Rmb8.1056.

Elsewhere, sterling was up 1.2 percent to $1.7592 in relation to the US dollar and advanced by 0.7 percent to £0.6890 against the euro. The US dollar lost ground against the euro to stand at $1.2124, down 0.5 percent. The dollar has been losing value despite a series of good reports on the US economy.