Yen off 7-year low after Japan official's comments cool election talk
The
yen had been flirting with a seven-year low against the dollar on
growing views that Abe will postpone a sales tax hike and call a general
election in December.
TOKYO/SYDNEY: The yen
pulled back from a seven-year low against the dollar on Wednesday,
after comments from a Japanese government official cooled heightened
speculation that Prime Minister Shinzo Abe
would call a general election in December. The yen had been flirting
with a seven-year low against the dollar on growing views that Abe will
postpone a sales tax hike and call a general election in December,
offering investors an excuse to sell the currency.
In the wake of growing expectations Abe would strengthen his political standing, Japan's top government spokesman Yoshihide Suga reiterated that it is up to the prime minister to decide whether to call a snap election. The dollar, which had popped above 116 yen earlier in the Asian trading session, was down 0.2 percent at 115.55. It had risen as far as 116.11 the previous day - a high not seen since October 2007. "There were concerns towards a political vacuum forming and Suga's comments prompted traders to buy back the yen," said Takako Masai, head of markets research department at Shinsei Bank in Tokyo. The dollar's losses were limited, however, as comments from the top government spokesman were not enough to douse the speculation after days of intense media coverage.
Joining a growing list of media outlets reporting on the subject, the Sankei newspaper, citing unnamed government and coalition officials, said Abe would also delay a planned second sales tax increase by a year and a half and take the issue to voters. Investors had already been selling the yen after the Bank of Japan shocked markets last month by expanding its massive stimulus spending to help reinvigorate an economy that has lost momentum after a sales tax hike in April. Now, Abe appeared likely to delay the second tax increase. "If it were to happen, that decision would be justifiably JPY negative, to the extent that it would further deteriorate an already ugly fiscal picture," said Raiko Shareef, currency strategist at the Bank of New Zealand. Observers also pointed towards other reasons the yen could come under pressure if Abe was to call a snap election and emerge victorious - a possibility that has fanned hopes for a second round of stimulus steps dubbed "Abenomics" to be implemented and boost equities. "Deteriorating fiscal discipline is of course a concern, but it is a mid- to long-term matter. Expectations towards further equity market gains is a key factor weighing on the yen at the moment," said Masashi Murata, a senior currency strategist at Brown Brothers Harriman in Tokyo. The euro stood little changed at $1.2463.
Investors kept a wary eye on the Swiss franc, which raced to a two-year high of 1.2021 francs per euro on Tuesday and tested Swiss National Bank's resolve to defend the 1.20 per euro ceiling ahead of the country's Nov. 30 referendum on whether the central bank should boost its gold reserves. A 'yes' vote would force the SNB to buy around 70 billion Swiss francs ($72.51 billion) worth of gold and could limit the bank's capability to maintain the stability of its currency, the central bank chief warned. Focus was also on the Bank of England's inflation report due later in the day. The BOE's forecasts are expected to confirm a push back in the expected timing of a first rise in interest rates long into 2015, something that is already broadly priced into UK money markets.
In the wake of growing expectations Abe would strengthen his political standing, Japan's top government spokesman Yoshihide Suga reiterated that it is up to the prime minister to decide whether to call a snap election. The dollar, which had popped above 116 yen earlier in the Asian trading session, was down 0.2 percent at 115.55. It had risen as far as 116.11 the previous day - a high not seen since October 2007. "There were concerns towards a political vacuum forming and Suga's comments prompted traders to buy back the yen," said Takako Masai, head of markets research department at Shinsei Bank in Tokyo. The dollar's losses were limited, however, as comments from the top government spokesman were not enough to douse the speculation after days of intense media coverage.
Joining a growing list of media outlets reporting on the subject, the Sankei newspaper, citing unnamed government and coalition officials, said Abe would also delay a planned second sales tax increase by a year and a half and take the issue to voters. Investors had already been selling the yen after the Bank of Japan shocked markets last month by expanding its massive stimulus spending to help reinvigorate an economy that has lost momentum after a sales tax hike in April. Now, Abe appeared likely to delay the second tax increase. "If it were to happen, that decision would be justifiably JPY negative, to the extent that it would further deteriorate an already ugly fiscal picture," said Raiko Shareef, currency strategist at the Bank of New Zealand. Observers also pointed towards other reasons the yen could come under pressure if Abe was to call a snap election and emerge victorious - a possibility that has fanned hopes for a second round of stimulus steps dubbed "Abenomics" to be implemented and boost equities. "Deteriorating fiscal discipline is of course a concern, but it is a mid- to long-term matter. Expectations towards further equity market gains is a key factor weighing on the yen at the moment," said Masashi Murata, a senior currency strategist at Brown Brothers Harriman in Tokyo. The euro stood little changed at $1.2463.
Investors kept a wary eye on the Swiss franc, which raced to a two-year high of 1.2021 francs per euro on Tuesday and tested Swiss National Bank's resolve to defend the 1.20 per euro ceiling ahead of the country's Nov. 30 referendum on whether the central bank should boost its gold reserves. A 'yes' vote would force the SNB to buy around 70 billion Swiss francs ($72.51 billion) worth of gold and could limit the bank's capability to maintain the stability of its currency, the central bank chief warned. Focus was also on the Bank of England's inflation report due later in the day. The BOE's forecasts are expected to confirm a push back in the expected timing of a first rise in interest rates long into 2015, something that is already broadly priced into UK money markets.
vijay kr yadav
pgdm 3rd year
sou- times of india
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