LONDON: The yen on Wednesday rose to its highest level against the dollar since 1995 as the Japanese currency benefitted from safe-haven sentiment, despite the deepening nuclear emergency.
At 1615 GMT the Japanese currency stood at 80.03 yen to the dollar, the strongest level since 79.75 yen hit on April 14 1995, which was a postwar record.
Despite Japan's nuclear crisis worsening Wednesday, with another fire at a quake-hit atomic power plant and a radiation spike there that forced the temporary evacuation of workers, the yen has been boosted by a number of factors.
"The deteriorating Japanese nuclear crisis and ongoing worries about the cost of restructuring of the Japanese economy after the huge earthquake are fuelling fears of a repatriation by Japanese funds," said analyst Nick Stamenkovic at RIA Capital Markets.
Many Japanese have also engaged in carry trades in which they make investments in higher yielding currencies, and the unwinding of these is also helping the yen, Stamenkovic noted.
"Even so the growing threat of BoJ intervention should lessen upward pressure on the yen near-term. Indeed, the central bank will probably want to draw alive in the sand around Y:$80," he said.
For the third straight day the Bank of Japan on Wednesday pumped emergency funds into the financial system. It offered 5.0 trillion yen ($61.8 billion) for money markets as part of a total pledge of 13.8 trillion across other market functions. The central bank put up eight trillion yen in same day funds Tuesday and a record 15 trillion on Monday to soothe sentiment and ensure firms can access cash. It has doubled to 10 trillion yen an earlier asset purchase scheme.
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