- The Japanese yen rose to a five-month high on Tuesday on the back of broad-based selling of the dollar and speculation the Bank of Japan could be close to dialing back record levels of monetary stimulus. The yen has gained 1.5 percent against the dollar this month, benefiting last week from a rush by investors into currencies deemed safer amid the rout in equity markets.
But while risk appetite has recovered this week, investors have continued to sell dollars and buy yen. The dollar was down more than half a percent against a basket of six currencies , reversing some of its gains last week, when it enjoyed its best performance since 2016. "A lot of people in the market are expecting the yen to rise, because a turnaround in BoJ monetary policy has not been priced in," Ulrich Leuchtmann, a Frankfurt-based analyst at Commerzbank said.
This helps explain the move, even though there is not consensus that the BoJ will follow other central banks in gradually ending the era of easy money soon. The yen rose as much as 1.1 percent to 107.41 per dollar, close to the high it hit in September at 107.32 yen.
If the yen breaks through that, it will hit its best level since late 2016. Elsewhere, the euro rose to a daily high of $1.2371, up 0.65 percent, as gains in global equity markets encouraged traders to sell the dollar and tiptoe back into riskier assets.