Japanese yen falls against US dollar


The Japanese yen has dipped against the US dollar today, raising suspicion that Japan has again taken action to weaken its currency.

Last Wednesday, the Bank of Japan (BoJ) intervened to stem its currency – which hit a fresh 15-year high against the dollar.

It was the first time in six years that such action had been taken.

A stronger yen has meant demand for exports has weakened – fuelling concerns for the recovery in the Japanese economy, which is the world’s second largest.

Japan was one of the first major economies to emerge from recession – in the second quarter of 2009 – boosted by exports.

Today, however, traders in Tokyo said a sharp yen drop was possibly due to intervention, though the fall happened at levels where authorities were not expected to take action.

However, there was no official confirmation as to whether action had been taken.

When Japan took action last week, it was obvious through the EBS trading system and Finance Minister, Yoshihiko Noda, confirmed the intervention.

Japan’s currency rose to 85.40 yen from about 84.55 yen in just a few minutes today and many traders said it seemed as if the BoJ had been selling yen.

“The price action is very specific and strange,” though no intervention had been directly seen, said Minoru Shioiri, chief manager of foreign exchange trading at Mitsubishi UFJ Morgan Stanley Securities.

The news comes as the US continues to press China to revalue its currency, the yuan.

The US has previously expressed dissatisfaction that China is keeping the value of the yuan low to help its exporters at the expense of overseas competitors.

Trade groups have argued that the yuan, also referred to as the renminbi, is kept up to 40% below what its value should be against the US dollar.

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