By William L. Watts and Myra P. Saefong, MarketWatch
LONDON (MarketWatch) -- The dollar climbed against most currencies Wednesday, gaining after Japanese authorities took long-awaited action in the global foreign-exchange markets in a bid to halt the yen’s advance on the greenback.
The dollar index (DXY 81.54, +0.46, +0.56%) , which tracks the performance of the U.S. unit a basket of six major currencies, stood at 81.685, up about 0.7% from 81.064 late Tuesday.
The greenback soared against the yen (USDYEN 85.2800, +2.2500, +2.7099%) to trade at ¥85.35, rebounding from ¥82.85 -- the lowest in more than 15 years -- seen before the intervention by Japan’s finance ministry. The dollar had changed hands at ¥83.13 in North American trading late Tuesday.
Finance Minister Yoshihiko Noda confirmed intervention in the foreign-exchange markets but didn’t specify the amount of money involved, according to reports. See report on Japan’s intervention in the forex market.
“The Japanese authorities need to be aggressive now and hit the market hard, fast and furious because as time goes on, the announcement effect will dissipate,” said David Bloom, global head of foreign-exchange strategy research at HSBC.
The action came a day after a leadership election for the ruling Democratic Party of Japan, in which Prime Minister Naoto Kan survived an internal challenge to his leadership. Read the full story on the election results.
Japan joins the club
“When viewed from the perspective of Asian currencies, the Japanese intervention has put Japan in line with other Asian central banks, which have been intervening to weaken their currencies,” said Mitul Kotecha, head of foreign-exchange strategy at Credit Agricole.
“However, Asian central bank intervention has merely slowed the appreciation in regional currencies, and Japan may have to be satisfied with a similar result,” he said.
Also, the “sensitivity of Asian currencies in general to the [dollar-yen rate] has lessened considerably over recent months, but still remains significant for some,” Kotecha said, citing the Malaysian ringgit, the Singapore dollar, the Philippine peso and the Thai baht.
The dollar traded at 3.1164 ringgit (USDMYR 3.1000, -0.0020, -0.0645%) from 3.1040 ringgit late in North American trading Tuesday; at 1.3376 Singapore dollars (USDSGD 1.3371, +0.0037, +0.2775%) versus S$1.3328; at 44.300 pesos (USDPHP 44.1200, +0.0200, +0.0454%) versus 44.030 pesos; and at 30.83 baht (USDTHB 30.7300, -0.0300, -0.0975%) versus 30.74 baht.
Euro hovers around $1.30
Meanwhile, the euro (EURUSD 1.2988, +0.0001, +0.0077%) gave back part of Tuesday’s rally to trade at $1.2965, down from $1.3024 late Tuesday.
The euro showed no reaction to data confirming that euro-zone inflation pressures remain subdued. Eurostat, the European Union statistics agency, said annual consumer price inflation slowed to 1.6% in August from 1.7% in July, matching an earlier estimate. Read pulse on euro-zone CPI.
The British pound (GBPUSD 1.5560, +0.0027, +0.1738%) traded at $1.5531, little changed from Tuesday.
