AGL 8.30 Decreased By ▼ -0.03 (-0.36%)
ANL 10.95 Increased By ▲ 0.25 (2.34%)
AVN 79.70 Increased By ▲ 1.51 (1.93%)
BOP 5.75 Increased By ▲ 0.18 (3.23%)
CNERGY 5.64 Increased By ▲ 0.26 (4.83%)
EFERT 79.36 Increased By ▲ 0.71 (0.9%)
EPCL 67.48 Decreased By ▼ -0.31 (-0.46%)
FCCL 14.89 Increased By ▲ 0.39 (2.69%)
FFL 6.70 Increased By ▲ 0.10 (1.52%)
FLYNG 7.16 Increased By ▲ 0.13 (1.85%)
GGGL 11.60 Increased By ▲ 0.26 (2.29%)
GGL 17.51 Increased By ▲ 0.27 (1.57%)
GTECH 8.35 Increased By ▲ 0.05 (0.6%)
HUMNL 7.17 Increased By ▲ 0.11 (1.56%)
KEL 3.14 Increased By ▲ 0.06 (1.95%)
LOTCHEM 35.20 Increased By ▲ 2.33 (7.09%)
MLCF 28.35 Increased By ▲ 0.05 (0.18%)
OGDC 87.70 Increased By ▲ 3.15 (3.73%)
PAEL 16.63 Increased By ▲ 0.18 (1.09%)
PIBTL 6.05 Increased By ▲ 0.20 (3.42%)
PRL 19.46 Increased By ▲ 1.34 (7.4%)
SILK 1.14 No Change ▼ 0.00 (0%)
TELE 11.41 Increased By ▲ 0.31 (2.79%)
TPL 9.20 Increased By ▲ 0.20 (2.22%)
TPLP 20.25 Increased By ▲ 0.37 (1.86%)
TREET 27.10 Increased By ▲ 0.48 (1.8%)
TRG 96.20 Increased By ▲ 1.70 (1.8%)
UNITY 20.85 Increased By ▲ 0.48 (2.36%)
WAVES 13.90 Increased By ▲ 0.27 (1.98%)
WTL 1.34 Increased By ▲ 0.03 (2.29%)
BR100 4,275 Increased By 67 (1.59%)
BR30 15,794 Increased By 348.3 (2.26%)
KSE100 42,872 Increased By 628.4 (1.49%)
KSE30 16,219 Increased By 247.6 (1.55%)

LONDON/SYDNEY: The dollar rose past the psychological level of 130 yen on Thursday for the first time since 2002, after the Bank of Japan (BOJ) doubled-down on its super-low yield policy, while the euro briefly fell below another symbolic mark of $1.05.

There had been some market speculation the BOJ might step back a little given the pressure building across foreign exchange markets but it showed no hesitation.

“The BoJ gave the ‘all clear’ to continue selling the yen”, commented Lee Hardman, a currency analyst at MUFG Bank in London.

The sell-off triggered by the BoJ saw the dollar soar to as high as 131 yen, its highest level in 20 years.

The BOJ’s commitment to its zero-rate programme puts it at odds with the U.S. Federal Reserve, for which markets are pricing over 150 basis points of hikes in just three meetings.

The policy gap between the two central banks boosted the dollar index, which rose as high as 103.70, its highest in five years and just a whisker from levels not visited since 2002.

Other Asian currencies were also under pressure. Against China’s yuan traded offshore, the dollar reached as high as 6.6562 yuan, its highest since November 2020.

Meanwhile the euro slid and briefly touched a more than five-year low of $1.0481, bringing its losses for the month to 5%, which would be its worst pummelling since early 2015.

Speculation is now growing the common currency could be on course towards parity with the dollar, a level not reached since 2002.

“It’s certainly looking like a realistic possibility”, Hardman argued, noting another key support at $1.034, a level last reached in 2017.

The common currency could however see some support if the European Central Bank decided to hike rates in July, a possibility which president Christine Lagarde opened the door to on Wednesday.

Investors nevertheless speculate that the economic impact of a sudden disruption of Russian gas supplies to Europe may deter the central bank from tightening monetary policy aggressively.

“The FX options market assigns a 35% probability to EUR/USD trading 1.00 at any time before year-end”, ING analysts wrote in a morning note.

One possible pot hole for the dollar will be data on U.S. gross domestic product due later on Thursday.

Comments

Comments are closed.