Last updated Tuesday, September 27, 2016 12:06 am GMT+8

Friday September 23, 2016
06:18 AM GMT+8

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Different currencies are shown at the main office of the Korea Exchange Bank in this picture illustration taken in Seoul October 22, 2010. — Reuters picDifferent currencies are shown at the main office of the Korea Exchange Bank in this picture illustration taken in Seoul October 22, 2010. — Reuters picNEW YORK, Sept 23 — The dollar and yen both sagged yesterday, one day after their backing central banks held policy rates stable amid uncertainty over inflation and economic growth.

The yen gave back some its surprising gains of Wednesday when markets decided the BoJ’s new effort to boost inflation by setting a yield cap on long bonds and planning to overshoot its 2 per cent inflation target might not do the trick.

The yen pulled back to 112.94 per euro and 100.77 per dollar, still stronger than the BoJ likely hoped after its latest try at stimulating growth.

Meanwhile the dollar was lower against the euro, at US$1.1208 (RM4.60), even though the Fed made clear that, while if it was not raising interest rates this week, it was likely to do so in December.

That could have been expected to push the greenback higher, said Christopher Vecchio at DailyFX.

But he noted that the Fed also indicated they expect a very slow pace of subsequent hikes, perhaps only two in 2017, less than markets had previously anticipated.

“Even as December 2016 rate hike odds rise, the Fed is lowering is expectations for the US economy and thus, reducing the estimated glide path of interest rates,” he said.

That points to less divergence with other key currency rates, hence the selling bias on the dollar. — AFP

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