Dollar falls again, Japan warns

A look at the day ahead in US and global markets from Mike Dolan

As the first quarter draws to a close, the U.S. dollar is once again strengthening, posting fresh gains on Wednesday against the Japanese yen, Swiss franc and Chinese yuan – and in the process drawing a stern warning from Japanese government officials. Has been.

The dollar/yen exchange rate hit a 34-year high just shy of 152 overnight – surpassing the previous peak of 2022, which prompted intervention from the Bank of Japan at the time. The dollar has now jumped nearly 20% against the yen since the beginning of last year.

Apparently monitoring the yen’s decline in real time, Japan’s Finance Minister Shunichi Suzuki issued his sternest warning yet in the current episode and said authorities could take “decisive measures” – a phrase he used earlier in the autumn. Used just before Japan moved to sell dollars in 2022. In the open market.

What is most troubling to Japanese officials is that the yen’s decline has accelerated even after the Bank of Japan began normalizing its ultra-loose monetary policy – ​​leading to speculation that the central bank may need to regulate the currency market. That score has to move forward quickly regardless of any move.

And of course Japanese stocks took advantage of the weaker currency as additional export incentives, with the Nikkei benchmark jumping nearly 1% on Wednesday.

The weaker yen puts pressure on other competing Asian currencies, not least China’s yuan – which also fell again earlier.

However, unlike the Nikkei, Chinese shares got no respite from the currency moves and fell to near one-month lows.

Although data showed Chinese industrial profits rose at the start of the year, foreign investors continued to exit the market due to political tensions and property sector concerns – selling nearly $1 billion again…

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