Yen declines after mid-week gains

Story link: Yen declines after mid-week gains

Despite its mid-week rally, the yen ended the week lower in relation to the New Zealand dollar and flat against several currencies. It was only able to maintain a gain over the US dollar, where it added 0.3 percent on the week to ¥123.50. The yen traded even versus the euro at ¥166.80, against sterling at ¥247.50, and in relation to the Australian dollar at ¥104.90, while it dropped 0.6 percent to ¥95.40 versus the New Zealand dollar.

The yen’s rally came as equities markets declined and the Japanese government warned of the risks of carry trades. In addition, the Bank for International Settlements said in a report that the current weakness of the yen is “anomalous”. At one point, the was over 1 percent higher against the major currencies and over 2 percent higher versus the Australian and New Zealand currencies.

Meanwhile, the US dollar also dropped in relation to both the euro and sterling. The declines came in the wake of Thursday’s decision by the Federal Reserve to hold interest rates at 5.25 percent for another month and accompanying warning that pressures toward inflation remain, although analysts said that the Fed’s decision should not have spurred the dollar’s decline.

The greenback dropped 0.3 percent during the week to $2.0500 against sterling, while it was down 0.4 percent to $1.3510 in relation to the euro.