Yen stronger ahead of Bank of Japan report

| September 5, 2006 | 0 Comments

The yen was stronger again on Tuesday as investors anticipated the Bank of Japan’s monetary policy report, due to be presented on Friday. Rumors that the Bank’s governor will hint that further advances in the interest rate could still be forthcoming this year helped the Japanese currency’s gains, as did positive new economic data and a strengthening of the Chinese renminbi.

All of this combined to send the yen 0.5 percent higher to ¥148.63 in relation to the euro, its highest in two weeks. However, the yen was little changed at ¥115.99 to the US dollar.

Sterling was weaker on the session, declining by 0.7 percent versus both the yen and the greenback, to ¥219.59 and $1.8929 respectively. The UK currency was also lower against the euro, dropping 0.2 percent to £0.6765. Sterling was hurt by a services sector report that was below what had been expected.

The US dollar was up 0.5 percent versus the euro to $1.2812 even though there were reports of governments buying more sterling and euro.

The rally in the New Zealand dollar appears to be over. The kiwi was 0.9 percent lower on the day to ¥75.08 against the yen, 2.1 percent below its level on Friday. The New Zealand currency was also down versus the US dollar, by 0.7 percent to $0.6465.

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