HONG KONG- The dollar climbed to a 24-year high on the yen on Monday after Japan’s ruling conservative coalition’s strong election showing indicated no change to loose monetary policies, and global growth fears helped the safe-haven dollar more broadly.
The dollar climbed to as high as 137.28 yen in morning trading, its highest since late 1998.
It then pared those gains slightly and was last up 0.6 percent at 136.93.
The dollar was also firm on the euro, which dropped 0.38 percent to $1.0144 heading back towards a 20-year intraday low hit Friday, leaving the dollar index up 0.4 percent at 107.3.
“The dollar is strengthening across the board but dollar-yen is leading the move,” said Rodrigo Catril currency strategist at National Australia Bank
He said investors’ move away from riskier assets had been supporting the dollar overall, while, in Japan, Sunday’s election result indicating there would no change to the country’s expansionary economic policy would weigh on the yen.
The Bank of Japan’s (BOJ) policy of keeping Japanese rates pinned down to support the economy, combined with rising US interest rates has been a major factor in the Japanese currency’s recent weakness.
BOJ Governor Haruhiko Kuroda said earlier in the day the central bank “won’t hesitate to take additional monetary easing steps as necessary”.
High inflation – by Japanese standards if not global ones – had led to some public pressure on policy makers to change course, but Catril said this pressure had been reduced by the coalition led by Prime Minister Fumio Kishida’s Liberal Democratic Party (LDP) increasing its upper house seats in Sunday’s election.
