The Japanese yen rose in Asian markets on Thursday against a basket of major and minor currencies, extending its gains for the second consecutive day against the US dollar and heading towards its highest level in three months, benefiting from declining demand for the US currency as the best alternative investment, amid de-escalation between the United States and Iran, and growing hopes for an imminent peace agreement.
The rise of the yen comes under the watchful eyes of Japanese authorities, who assert that Japan faces no restrictions on the pace of its intervention in the foreign exchange market to support the local currency, and that it is in daily contact with US monetary authorities.
Price overview
Today's Japanese yen exchange rate: The dollar fell against the yen by about 0.2% to 156.03 yen, from today's opening price of 156.33 yen, and recorded a high of 156.53 yen.
The yen ended trading on Wednesday up 1.0% against the dollar, its first daily gain in the last four days, and hit a three-month high of 155.03 yen, amid speculation that the Bank of Japan will continue its intervention.
US dollar
The dollar index fell by about 0.15% on Thursday, continuing its losses for the second consecutive session and heading towards its lowest level in three months, reflecting the continued decline in the levels of the US currency against a basket of global currencies.
Risk appetite improved in global markets, with demand for the US dollar as a safe haven declining, coinciding with easing tensions between the United States and Iran in the Strait of Hormuz and growing hopes for an imminent peace agreement.
Iran announced on Wednesday that it was reviewing a US peace proposal, with sources indicating that the proposal could formally end the war, but would leave some key US demands unresolved, most notably Iran suspending its nuclear program and reopening the Strait of Hormuz.
Japanese authorities
Japan’s top currency diplomat confirmed on Thursday that Japan faces no constraints on the pace of its intervention in the foreign exchange market to support the local currency, and that it is in daily contact with US authorities.
The remarks by Atsuki Mimura, the Finance Minister for International Affairs, came ahead of U.S. Treasury Secretary Scott Bisent’s visit to Tokyo next week, where he is expected to discuss the yen’s movements with Japanese Finance Minister Satsuki Katayama.
Mimura told reporters that their focus, consistently and unchanged, extends in all directions, stressing that Tokyo still sees speculative movements in the currency market.
Sources told Reuters that Japanese authorities intervened in the currency market last Thursday, with financial market data indicating they sold approximately $35 billion worth of currency to support the yen. Since then, the market has seen three sharp declines in the yen's value up to Wednesday.
Japanese interest rate
The pricing of the probability that the Bank of Japan will raise interest rates by a quarter of a percentage point at its next June meeting is currently at around 65%.
In order to reprice those probabilities, investors are awaiting further data on inflation, unemployment and wage levels in Japan.
