Currency news - Asian pressures support yen

Asian pressures support yen - 18-10-07

There will also be further underlying global pressure for stronger Asian currencies with the yen likely to secure support ahead of the weekend G7 meetings. A further Chinese monetary tightening or a revaluation would also tend to strengthen the yen, possibly sharply.

The trend for a firmer yen initially reversed on Wednesday as US equity prices opened stronger, but there was then a sharp dip on Wall Street which provided renewed yen support. From lows around 117.20, the Japanese currency strengthened to 116.30 against the dollar and 165.0 against the Euro.

Volatile trading has continued on Thursday with the yen drifting back to 116.60 against the dollar before finding renewed buying support.

Markets overall are likely to be cautious over yen selling with the potential for G7 calls for stronger Asian currencies still providing important backing ahead of the weekend meetings.

Remarks from Chinese central bank officials that the market would be allowed to take a greater role in setting the currency helped support the yen. There has also been renewed speculation that the Chinese authorities would announce a yuan revaluation. Any Chinese flexibility on currencies would tend to support the yen.

Tim Clayton
Investica Ltd
E-mail: tim.clayton@investica.co.uk
+44 (0) 1452 781001

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