News Column

Dollar hovers near 105 yen as BOJ stands pat, ECB meets

September 4, 2014

Ryotaro Nakamaru

The U.S. dollar traded narrowly near 105 yen Thursday in Tokyo as the Bank of Japan kept its huge monetary easing measures unchanged and before the European Central Bank votes on policy later in the day.

At 5 p.m., the dollar fetched 104.94-95 yen compared with 104.76-86 yen in New York and 104.95-97 yen in Tokyo at 5 p.m. Wednesday. It moved between 104.76 yen and 105.02 yen during the day, changing hands most frequently at 104.92 yen.

The euro was quoted at $1.3142-3143 and 137.92-96 yen against $1.3145-3155 and 137.77-87 yen in New York and $1.3126-3128 and 137.76-80 yen in Tokyo late Wednesday afternoon.

The BOJ policy board voted unanimously at the end of a two-day meeting to continue purchasing assets to increase Japan's monetary base by 60 trillion to 70 trillion yen annually.

"It didn't have much effect on currency trade today," said Kengo Suzuki, chief foreign exchange strategist at Mizuho Securities Co.

But the BOJ's desire to reach its inflation rate target of 2 percent, economic stagnation after a consumption tax hike in April, and government pressure to shore up the economy before a second tax hike next year could combine to move the central bank to ease further, Suzuki said.

The dollar, which the previous day hit an eight-month high of 105.31 yen, remained firm on optimism about the U.S. Labor Department's employment report for August to be released Friday, dealers said.

If the U.S. jobs report shows wage increases or a lower unemployment rate, both closely watched by the Federal Reserve as it ponders the timing for raising its benchmark interest rate from the current near-zero level, that could bring U.S. long-term rates up and bolster the dollar, said Minori Uchida, head of Tokyo global market research at the Bank of Tokyo-Mitsubishi UFJ.

The euro was little changed against the dollar and the yen Thursday ahead of the ECB's policy meeting and President Mario Draghi's press conference.

Some market players speculate the ECB will implement further easing measures to combat economic stagnation and persistently low inflation in the eurozone.

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Source: Japan Economic Newswire

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