Yen Falls First Time in Five Days as Official Calls Rally Abrupt

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The yen fell against the dollar for the first time in five days after a Ministry of Finance official said the Japanese currency’s rally to a seven-month high had been “abrupt.”

The greenback climbed from the weakest since January against the euro as U.S. equity-index futures advanced and European stocks rose for the first time in five days. Australia’s dollar rose the most in almost two weeks after sliding Monday to a six-year low on concern China’s slowing economy will damp global growth.

“We’ve seen government officials talking about moves being rapid, so we’re getting the first hints basically of the government getting a little bit concerned about the extent of yen strength here,” said Ray Attrill, global co-head of currency strategy in Sydney at National Australia Bank Ltd.

The yen slid 1.2 percent to 119.85 per dollar as of 9:03 a.m. in London after surging to 116.18 on Monday, the strongest since Jan. 16.

“I think it was abrupt,” the Finance Ministry official said, when asked by reporters in Tokyo Tuesday about the yen’s surge overnight.

Japan’s Economy Minister Akira Amari told reporters in Tokyo that the yen’s advance on haven demand Monday shows the nation’s economy is seen as “sound.” Twenty-one of 37 economists in a Bloomberg survey conducted July 27 to Aug. 3 forecast the Bank of Japan will eventually add to its record stimulus, with 12 predicting action in October.

The dollar rose 0.9 percent to $1.1521 per euro, after falling 2 percent Monday.

Easing Likelihood

“We saw a significant clear-out of short euro and yen positions in the last few sessions,” said Callum Henderson, the global head of foreign-exchange research at Standard Chartered Plc in Singapore. “This morning’s rally in dollar-yen reflects a persistent view that a weaker yen is needed to support the Japanese economy -- as well as the growing likelihood that the BOJ will ease again in October.”

A short position is a bet a currency will weaken.

Australia’s dollar climbed 0.7 percent to 72.04 U.S. cents, after tumbling to 70.50 on Monday, the weakest since April 2009. New Zealand’s currency gained 0.5 percent to 65.15 U.S. cents, after plunging as much as 8.3 percent Monday.

Federal Reserve Bank of Atlanta President Dennis Lockhart said he continues to expect the first U.S. interest-rate increase in nearly a decade this year, while cautioning that a stronger dollar, a weaker Chinese yuan and falling oil prices complicate the outlook. He didn’t cite a particular month.

Traders have cut to 26 percent the odds that the Fed will raise interest rates at its September meeting, down from 48 percent on Aug. 18. The calculation is based on the assumption that the effective fed funds rate will average 0.375 percent after the first increase.

(An earlier version of this story was corrected to say Amari made comments to reporters, not in parliament.)

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