TOKYO: The dollar extended its gains in Asia Tuesday, hovering around a six-year high against the yen, while the British pound struggled to recover from a sell-off fuelled by fears of Scottish independence.
The dollar bought 106.26 yen in midday Tokyo trading, compared with 106.03 yen in New York Monday afternoon, soaring to its highest levels since during the global financial crisis.
The euro slipped to $1.2872 against $1.2895, while it inched higher to 136.77 yen and 136.72 yen.
Weak Japanese GDP data has boosted speculation that the Bank of Japan would be forced to launch further easing measures -- weakening the yen -- at its October meeting. Policymakers held fire at last week's gathering.
"I think we should conclude that the dollar-yen rate is breaking above 105 in a sign that suggests the market is factoring into expectations for further monetary easing on the Japanese side," said SMBC Nikko Securities strategist Chotaro Morita.
The euro was also under pressure after the European Central Bank last week announced a fresh interest rate cut and easing measures, as the US central bank heads in the opposite direction by scaling back its stimulus as it looks to raise interest rates.
John Kicklighter, chief currency strategist at DailyFX, said the greenback's latest rise was "less to the dollar's own intrinsic merits and more to the exceptional weakness of its counterparts".
In response to the dollar creeping above the 106 yen level, Japanese economy minister Akira Amari warned that "big fluctuations (in currency markets) aren't good for the global economy".
But when asked about the dollar-yen rate, he refused to comment directly.
The pound was stuck at a 10-month low against the dollar after tumbling on Monday in response to a survey that showed for the first time more people in Scotland could vote for independence from the United Kingdom than against.
The British pound bought $1.6078, well down from $1.6323 on Friday before the survey. The news has given a jolt to investors who had not envisaged a victory for the "Yes" campaign and so had not priced in the effects of a break-up of the UK.
Comments
Comments are closed for this article.