You are here
Yen turns higher as market rebuffs Tokyo warnings
[NEW YORK] The yen pushed higher Wednesday after being talked down for two days by Japanese officials worried about an overly strong currency.
The British pound, meanwhile, was stable against the dollar but lower on the euro ahead of Thursday's Bank of England policy meeting.
Warnings of intervention to keep the currency from strengthening by Prime Minister Shinzo Abe and Finance Minister Taro Aso had managed to push the yen lower on Monday and Tuesday, but traders appeared unconvinced in Wednesday's session.
The yen pushed up 0.8 per cent to 108.39 per US dollar, and up 0.3 per cent against the euro to 123.85 yen.
The strength of the currency - the yen is up more than 10 per cent against the dollar this year - led Toyota on Wednesday to warn that net profit in the current fiscal year would fall by about a third, because it sells far more cars and trucks outside of Japan than it does domestically.
"Our earnings over the past several years have been boosted by (favorable) exchange rates," said Toyota president Akio Toyoda.
"But we recognize that this trend has changed significantly." Toyota said its new forecast was based on the dollar buying around 105 yen, well down from an average 120 yen in the previous year.
The Bank of England meets on monetary policy Thursday with recent economic indicators slightly deteriorated and the potentially destabilizing Brexit vote on leaving the European Union just six weeks away.
The pound "may struggle to retain the rebound from earlier this week should the Bank of England curb its economic outlook," said David Song of DailyFX.
"Even though the BoE is widely anticipated to retain its current policy in May, a downward revision in the central bank's growth and inflation forecast may dampen the appeal of the British pound as it drags on interest-rate expectations."