TOKYO- The dollar edged up on Thursday, supported by expectations for aggressive Federal Reserve monetary tightening, but it was well off the previous day’s peaks amid nervousness about what G7 might say about its rapid appreciation.
The greenback firmed 0.34 percent to 128.305 yen, after soaring to a two-decade high of 129.430 on Wednesday as the Bank of Japan (BOJ) stepped in to the bond market for the third time in three months to defend its zero-percent yield target, drawing a stark contrast with the Fed’s increasingly hawkish posture.
Finance Minister Shunichi Suzuki said on Thursday in Washington D.C. that he had explained the yen’s “somewhat rapid” declines to his Group of Seven counterparts, but did not comment on how they reacted.
He has warned in recent days about the potential damage to the Japanese economy from a weakening currency.
Suzuki is due to meet US Treasury Secretary Janet Yellen this week, prompting traders to pare back bearish yen bets on the potential for a step-up in rhetoric.
The dollar index – which measures the currency against six peers including the yen – ticked up 0.16 percent to 100.50, following its retreat in the previous session from a more than two-year peak of 101.03.
Also allowing the dollar to ease overnight, benchmark Treasury yields pulled back from the highest level since December 2018 at close to 3 percent, as dip buyers emerged. Those yields, though, also inched higher in Tokyo trading on Thursday. — Reuters
