In Singapore, the yen struggled below the 155-per-dollar mark on Thursday as the Bank of Japan (BOJ) commenced its two-day rate-setting meeting. Traders remained on edge, wary of potential intervention from Tokyo while policy discussions unfolded.
After trading within a narrow range recently, the dollar finally surpassed the 155 yen threshold in the previous session, a level not seen since 1990. Early in Asian trading, it held steady at 155.34 yen.
Speculation about Japanese authorities intervening to support the yen had restrained the dollar’s climb toward this significant level, perceived by some as a trigger for action from Tokyo.
This breach of the 155 yen level coincides with the BOJ’s deliberations on monetary policy. However, expectations lean towards the central bank maintaining its short-term interest rate target, following last month’s notable departure from negative rates.
“We anticipate a slightly hawkish stance from the BOJ meeting,” remarked Carl Ang, a fixed income research analyst at MFS Investment Management. “Given recent communications from March, it seems premature for the BOJ to shift away from their accommodative stance in April.”
Anticipations of gradual policy tightening and a persistently low terminal policy rate pose challenges for significant yen appreciation, even at historically low levels.
BOJ Governor Kazuo Ueda indicated earlier in the week that the central bank would consider raising interest rates if trend inflation progresses towards its 2% target as anticipated.
Elsewhere in the market, the dollar regained ground after a minor dip earlier in the week, following positive business activity data from the euro zone and the UK, which had lifted the euro and sterling.
The euro saw a slight uptick to $1.0702, retreating marginally from its over one-week peak reached on Wednesday, while sterling held steady at $1.2463.
Against a basket of currencies, the dollar stabilized at 105.79, moving away from nearly a two-week low experienced in the prior session.
Trading activity in Asia was subdued with Australia observing a holiday. The Australian dollar saw a modest gain to $0.6500, buoyed by diminishing expectations of rate cuts from the Reserve Bank of Australia (RBA) following slower-than-expected consumer price inflation in the first quarter.
“Inflation is moderating, but the RBA may require further evidence before confidently expecting a return to the 2–3% target range,” noted Justin Smirk, senior economist at Westpac. “As such, we anticipate the RBA to maintain its current stance in May.”
The New Zealand dollar advanced to $0.5940, registering a gain of 0.08%.
(Reporting by Rae Wee; Editing by Shri Navaratnam)
