Yen stronger on investor confidence as rand and real also rise against USD

Story link: Yen stronger on investor confidence as rand and real also rise against USD

The yen was stronger on Wednesday on surging equities markets, signs of strength in the Japanese economy, and on the possibility that Prime Minister Junichiro Koizumi may yet come out the winner in September’s elections.

Polls in Japanese newspapers showed that Mr. Koizumi’s approval ratings were up and that the majority of those responding to the polls support post office privatization, the issue around which the current political upheaval revolves.

Economic strength was indicated by the rise in July’s domestic corporate goods price index, which was up by 1.5 percent compared to the same month last year. In addition, the Nikkei 225 equities index in Tokyo closed at its highest level in nearly a year and a half.

Meanwhile in the UK, sterling was helped by a new Bank of England quarterly inflation report that showed it might not need to cut interest rates again soon. Sterling gained 0.3 percent to $1.7932 in relation to the US dollar, a six-week high, and was up 0.5 percent to £0.6888 against the euro.

At mid-day in New York, the US dollar had risen 0.2 percent to $1.2348 in relation to the euro and was up by 0.2 percent as well against the Swiss franc, at SFr1.2609. The dollar had been at a 2-month low in relation to both currencies earlier in the day.

The Brazilian real and the South African rand, however, both were stronger in relation to the US dollar. The rand was up 1.1 percent to R6.37 against the dollar, while the real gained 0.6 percent to R$2.2718 in relation to the greenback, a 40-month high.