Yen drops to 2-year low against dollar



Reuters

Published — Thursday 27 December 2012

Last update 27 December 2012 2:25 am

| نسخة PDF Print News | A A

NEW YORK/TOKYO: The yen fell to a two-year low against the dollar yesterday after Japan swore in a new prime minister who has called for weakening the currency to stimulate inflation, while US stocks slipped in thin trading.
The dollar rose as high as 85.74 yen on trading platform EBS, the highest since September 2010, following the swearing-in of Shinzo Abe as premier and was last at 85.65. The euro rose as high as 113.40 yen, a 16-month high, up 1.4 percent. The euro was at $1.3223 against the dollar, up 0.3 percent.
Abe is calling for a mix of aggressive monetary policy easing and big fiscal spending to beat deflation and weaken the yen. He is pressuring the Bank of Japan to adopt a 2 percent inflation target that would auger for a weaker currency, threatening changes at the central bank if his wishes are not met.
"The election of Abe has had a galvanizing effect on the dollar/yen exchange rate and he has been able to accomplish more in two months of jawboning than the BoJ has... over the past several years," said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
US shares were slightly lower in post-Christmas trading, picking up from losses on Monday, as Congress looks likely to fail to negotiate a deal to avoid the "fiscal cliff," a series of $ 600 billion in spending cuts and tax hikes that would slow the US economy sharply unless lawmakers take action.
US stocks have held in a tight range, recovering losses sustained just after the US election in November. The S&P 500 is still up about 13 percent on the year.
The Dow Jones Industrial Average dropped 53.68 points, or 0.41 percent, at 13,085.40. The Standard & Poor's 500 Index was down 9.13 points, or 0.64 percent, at 1,417.53. The Nasdaq Composite Index was down 27.69 points, or 0.92 percent, at 2,984.91.
Many markets remained closed following Christmas. European exchanges were largely shuttered, and Hong Kong and Australia were also closed. The MSCI All-World Index was down 0.15 percent on Wednesday.
Brent crude climbed above $110 per barrel yesterday, hitting a two-month high, with investors hoping for a last-minute deal to avoid a U.S. fiscal crisis. US crude futures gained $2.30, or 2.6 percent, to $90.91.
The weaker yen has bolstered hopes for better earnings from Japanese companies and underpinned the Nikkei, which has gained about 18 percent since mid-November, when the election was scheduled. The yen has lost nearly 8 percent against the dollar in the same period.
The Nikkei closed at a nine-month high yesterday, with a 1.5 percent gain.
Minutes of the BOJ's policy-setting meeting in November, released yesterday, showed that some board members said the central bank must act decisively, without ruling out any policy options, if the outlook for the economy and prices worsens further.
MSCI's broadest index of Asia-Pacific shares outside Japan was little changed. Shanghai shares were flat, but stayed in positive territory on the year after a 2.5 percent jump on Tuesday erased 2012 losses. It is set for a first annual gain in three years.

What's happening around Saudi Arabia

JEDDAH: An African expat woman is being investigated for torturing her baby to death by pouring boiling water on her. The motive behind the vicious attack is unknown.The Board of Investigation and Prosecution in Jeddah has charged the woman with semi...
RIYADH: Over five million Overseas Filipinos Workers (OFWs), including more than one million in Saudi Arabia, observed “zero remittance day” on Friday, in protest against the random checking of boxes sent by them to their families back home by the Cu...
RIYADH: The Ministry of Health announced on Friday that two more people were infected with the Middle East Respiratory Syndrome (MERS) coronavirus. While no deaths were announced, the virus has already killed 26 people in just two weeks, from Aug. 16...
JEDDAH: As international schools in the city gear up for the new academic session, some parents have requested that schools improve the quality of their classes in Islamic studies. Although the Ministry of Education has decreed that all international...
JEDDAH: Health Minister Khaled Al-Falih met with Grand Mufti Sheikh Abdul Aziz Al-Asheikh on Thursday to discuss the Health Ministry’s proposed ban on sacrificing camels during this year’s Haj.Several health officials accompanied Al-Falih at the meet...
MAKKAH: The executive list of the child protection system has now defined 14 kinds of abuse.These include keeping a child without a family document, not administering compulsory vaccinations, disrupting their education, exposing them to an environmen...

Stay Connected

Facebook