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Yen soars to 21-month dollar high as BoJ holds fire on stimulus

Thursday, June 16, 2016 - 11:57
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[TOKYO] The yen on Thursday powered to a 21-month high against the dollar after the Bank of Japan held fire on fresh stimulus, as fears over Britain's future in the EU pummel financial markets.

Japan's currency hit 104.53 against the dollar, its strongest level since September 2014, as the central bank's policy board voted to keep its 80 trillion yen (S$1 trillion) asset-buying plan unchanged.

The decision comes after the Federal Reserve on Wednesday held off raising interest rates as its boss Janet Yellen sounded a warning over a possible British exit from the EU.

Her comments had sent the dollar tumbling against the yen in US trade, with the losses picking up after the Japanese central bank also held steady on fresh policy moves.

Another round of easing from the BoJ would tend to weaken the yen, which has been gaining favour as investors seek out assets seen as safe bets.

"The yen is being bought because some traders had expected more easing (from the BoJ) but the bank didn't make a move," said Marito Ueda, a senior dealer of FX Prime in Tokyo.

"Because of concerns over Brexit, the yen had already been bought more than the dollar," he added.

World markets have been in turmoil over the past week on worries about the global economic outlook and, in recent days, a growing sense that the June 23 referendum will see Britons vote to break away from the European Union.

The euro also dropped further, hitting a more than three-year low of 117.84 yen, against 119.17 in Tokyo before the BoJ decision.

AFP

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