SINGAPORE, Feb 15 — The dollar extended its losses against the yen and hit a fresh 15-month low today, with market participants bracing for further near-term weakness in the US currency.
The dollar dropped below yesterday’s nadir of ¥106.725 (RM3.9) and fell as low as 106.42 yen, its weakest level since November 2016. That marked a drop of 3.7 per cent from its early February peak near ¥110.50.
The US currency later pared some of its losses and was last down 0.3 per cent at ¥106.67.
“There’s nothing specific, it’s just a continuation of dollar selling that we’ve seen everywhere overnight, said Tareck Horchani, head of sales trading in Asia Pacific for Saxo Markets in Singapore.
Traders and analysts said the next support level for the dollar was around ¥105.
Some market participants said speculative buying of the yen initially helped drag the dollar lower, with stop-loss dollar selling later adding to the fall against the Japanese currency.
Yesterday, the dollar gained a lift after a stronger-than-expected rise in US consumer prices in January bolstered bets that the Federal Reserve might raise interest rates four times in 2018.
But that gain for the dollar proved short-lived, and the greenback ended up retreating broadly against major peers despite the change in expectations for US interest rates.
In today’s Asian trade, the euro edged up 0.1 per cent to US$1.2459 (RM4.85), after gaining 0.8 per cent yesterday. Sterling was steady at US$1.4004, after also having risen 0.8 per cent the previous day.
In the wake of the dollar’s sharp drop against the yen over the past couple of weeks, there was increased focus on whether Japanese exporters and Japanese investors would step up moves to hedge their exposure to the US currency.
“As a defensive mechanism I think they will probably be more inclined to sell dollars here to protect downside risk for further US dollar weakness,” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
“Obviously I think we’re going to have the verbal lashing from Japan’s currency officials. But I still think we’re not close to the point of overt intervention and I think the market’s going to take us down to the 105s,” Innes said.
Japanese Finance Minister Taro Aso said today that he doesn’t see current yen moves as being so strong or weak that would warrant intervention, adding that there was no plan now to respond to FX moves. — Reuters