13 Feb

indexThe yen rallied on Tuesday, reversing the previous day’s late selloff against the dollar and euro after an official with the G7 said it is worried about excess moves in the Japanese currency.

World stock markets edged higher and the Dow Industrials climbed within striking distance of an all-time high as investors looked ahead to President Barack Obama’s State of the Union address on Tuesday evening.

However, the market interpreted the statement as a sign that the G7 supported Japan’s moves, prompting an official from a G7 nation to say later that the group “is concerned about unilateral guidance on the yen.”

 

The comments – meant to clarify the G7 statement – sparked a rally in the yen against the dollar and euro.

 

The dollar was down 0.9 percent against the yen at 93.50, having risen to 94.42 yen on Monday, according to Reuters data, the highest since May, 2010.

 

The euro fell 0.5 percent to 125.77 yen, after a 2 percent rally on Monday.

Japanese Finance Minister Taro Aso welcomed the statement, saying it recognized Tokyo’s policy steps were not “aimed at influencing currency markets.”

Tokyo is likely to come under serious pressure when G20 finance ministers and central bankers meet in Moscow at the end of the week, not least because the United States is employing similar policies.

Source: reuters.com

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