The yen plunged, erasing its gains this week, after Bank of Japan Governor Haruhiko Kuroda signaled that the economy is recovering at a moderate pace, spurring bets that the policymakers will retain stimulus.
The Japanese currency declined 0.3 percent to 102.05 a dollar at 7 a.m. trading in New York, reducing its weekly increase to 0.4 percent. It fell 0.2 percent to 138.15 a euro. The euro fell 0.1 percent to $1.3539. Traders drove the yen down against the dollar after the BOJ retained its bond-buying program.
“You are still on a winner playing a weaker yen,” Roberto Mialich, a Milan-based senior currency strategist at UniCredit SpA told Bloomberg. “The risks of more liquidity injection by the BOJ are still concrete and clearly this doesn’t play in favor of the yen.”
The Bank of Japan revealed that it will extend its monetary base by 60 trillion yen ($588 billion) to 70 trillion each year, matching economists’ expectations. Kuroda said the central bank will maintain its easing program until inflation rises to and stabilizes at 2 percent. He said the bank is currently halfway before reaching the targeted inflation.
The pound rose to its strongest level in 19 months against the euro after the Bank of England Governor Mark Carney signaled that Britain’s interest rates may be hiked sooner than expected. The pound rose up to 0.3 percent to trade at 79.84 pence a euro, its highest level since November 2012, before declining to 79.85 pence. The British currency also advanced 0.2 percent to $1.6955.
The pound has rallied 9.1 percent in the past one year, making it’s the best performing currency among the 10 advanced-economy currencies monitored by the Bloomberg Correlation-Weighted Indexes. The euro has rallied 1.7 percent while the yen has slumped 6.9 percent. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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