Yen Tumbles as Commodity Exporters' Currencies Get a Reprieve

  • Traders pare expectations for March rate increase by Fed
  • U.S. policy statement boosted higher-yielding assets: Mizuho

The yen fell against currencies of commodity exporting nations after the Federal Reserve’s dovish policy statement was taken by investors as a potential boost for the global economy.

Japan’s currency dropped against 15 of its 16 major peers, tumbling the most against South Africa’s rand, Australia’s dollar and Mexico’s peso -- all nations dependent on commodity prices, which have been hit this year amid signs of a slowdown in Chinese growth.

The Fed’s first statement since its December interest-rate increase noted that officials are “closely monitoring” developments from China to Europe for any adverse impact on the U.S. economy, prompting speculation the pace of policy tightening could be slowed if market turmoil continues. That damped demand for havens such as the yen.

“The market has largely pushed out a March rate hike by the Fed,” said Neil Jones, London-based head of hedge-fund sales at Mizuho Bank Ltd. “That’s seen as a boost for high-yielding assets.”

The Japanese currency weakened 0.1 percent to 118.83 per dollar as of 7:20 a.m. New York time, its third day of declines. It dropped 0.8 percent against its South African peer, leaving one rand costing 7.27 yen, and fell 0.7 percent to 84 to the Australian dollar.

Traders see a 16 percent chance of a Fed rate boost in March, down from 25 percent before the U.S. central bank held borrowing costs in a range of 0.25 percent to 0.5 percent on Wednesday, futures data compiled by Bloomberg show.

“A March Fed rate hike looks increasingly unlikely,” said Bernd Berg, an emerging-markets strategist at Societe Generale SA in London. “We’re now entering a risk-on phase and oil-related currencies will post a sizable rally.”

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