Dollar hits new 34-yr high in mid-155 yen after strong U.S. data

TOKYO (Kyodo) — The U.S. dollar climbed to a new 34-year high in the mid-155 yen range in Tokyo, as more solid U.S. economic data dampened expectations the Federal Reserve will cut interest rates soon.

The dollar hit around 155.44 yen in the morning, as stronger-than-expected U.S. March durable goods orders reinforced the perception that the interest rate differential between the United States and Japan will remain wide, analysts said.

At noon, the dollar fetched 155.43-44 yen compared with 155.28-38 yen in New York and 154.89-91 yen in Tokyo at 5 p.m. Wednesday.

The euro was quoted at $1.0705-0709 and 166.39-46 yen against $1.0693-0703 and 166.13-23 yen in New York and $1.0687-0689 and 165.54-58 yen in Tokyo late Wednesday afternoon.

The dollar hit the new high despite persisting wariness about a possible yen-buying intervention by Japanese authorities, with the currency topping the psychologically important 155 yen line overnight.

The market reacted little to a verbal warning by Finance Minister Shunichi Suzuki Thursday morning in which he said there is no change “at all” in the government’s stance that it will act appropriately to address the yen’s weakness.

“Traders seemed to have taken the view an intervention won’t come before the Bank of Japan concludes its two-day policy meeting Friday,” said Yukio Ishizuki, senior foreign exchange strategist at Daiwa Securities Co.

“The market’s focus now likely shifted to when an intervention will take place, rather than whether or not it happens, as it would be difficult to reverse the current trend without an intervention,” he said.

Stocks fell sharply as investors locked in gains after the Nikkei jumped over 900 points the day before, while a cautious mood prevailed ahead of the BOJ policy meeting outcome.

The 225-issue Nikkei Stock Average fell 641.97 points, or 1.67 percent, from Wednesday to 37,818.11. The broader Topix index was down 34.00 points, or 1.25 percent, at 2,676.73.

“The scale of gains the previous day, the BOJ meeting and upcoming Golden Week holidays dampened investors’ appetite for risk,” said Makoto Sengoku, senior equity market analyst at the Tokai Tokyo Intelligence Laboratory Co.