NEW YORK: The yen climbed on Friday and was on track for its biggest daily percentage gain in more than a week after Japan said it plans to encourage pension funds to increase their holdings of domestic financial assets.
Japanese Finance Minister Satsuki Katayama said the government was pursuing measures that would include encouraging the Government Pension Investment Fund, the world’s largest pension fund, to make “substantially greater investments in Japanese financial assets.”
The Japanese yen strengthened 0.38 percent against the greenback to 161.77 per dollar after reaching 161.27. However, the dollar was still up about 3 percent on the week against the yen.
“If you look at the scope or scale of the move, it’s not that impressive — it went from, it was a one yen move, and it’s retraced partially already. So it’s like, all right, when are we gonna talk seriously about the matter?” said Eugene Epstein, head of trading and structured products at Moneycorp in Stamford, Connecticut.
“At this point, it’s still just, it’s an urging, it’s not an official directive, and frankly, they could just be testing the waters … this is a good step, so let’s actually maybe put something firm here and then see how the markets react further.”
The rally was broad-based, with the euro and British pound down around 0.4 percent each against the Japanese currency. Before Friday’s news, the yen had been holding near 40-year lows, keeping traders on watch for potential intervention by Japanese authorities.
The dollar was roughly unchanged on the day, with the dollar index, which measures the greenback against a basket of currencies, edging up 0.01 percent to 100.92. For the week, the dollar was up about 0.1 percent. The euro was down 0.06 percent at USD1.142 while sterling was little changed, up 0.01 percent at USD1.3407 after climbing to USD1.3451, its highest since June 15.
Investors also monitored tensions in the Middle East, where a new flareup of hostilities this week between the US and Iran has renewed concerns for the outlook of energy prices and global inflation, and the impact on policy for global central banks.
Daily tanker traffic in the Strait of Hormuz appeared to have slowed on Friday, with both sides still arguing over who was in control of passage through the critical waterway.
US crude fell 0.55 percent to USD71.67 a barrel and Brent fell to USD76.10 per barrel, down 0.25 percent on the day as Iran’s semi-official Tasnim news agency reported a Qatari delegation visited Iran on Friday in what is believed to be an effort by Doha to consolidate its role as a mediator.
Still, the recent escalation in hostilities put crude prices on track for a weekly gain as supply worries were exacerbated.
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