TOKYO (MarketWatch) — The dollar steadied against Japan’s currency Wednesday after a sudden drop to a nearly four-month low, while the yen extended gains against the euro.
Japanese Finance Minister Yoshihiko Noda said the dollar’s drop against the yen was “a little one-sided,” according to media reports.
Against the yen, the dollar USDJPY +0.32% was changing hands at ¥79.41, compared with ¥79.40 in late North American trading on Tuesday, but well above the dollar’s Tuesday intraday low of ¥78.48 on the EBS trading platform — its lowest level since it dropped to a record bottom of ¥76.25 on March 17, days after Japan’s March 11 earthquake. See real-time currency quotes and tools.
The dollar’s tumble in March had led the Group of Seven leading economic nations to conduct joint currency intervention to stem the yens’s rise. But intervention appeared less likely now, because the yen’s current upward momentum differs from its post-earthquake strength.
In March, Japanese developments “triggered a global equity market decline and led to global financial-market instability,“ but the yen’s recent strength “is the result of external uncertainties rather than the cause,” said Barclays Capital chief Japan currency strategist Masafumi Yamamoto.
“The ongoing (or even rising) concerns about European peripheral countries’ debt problems is one of the key sources of yen strength,” Yamamoto said in a note to clients Wednesday.
Against the Japanese unit, the euro EURJPY +0.41% was buying ¥111.26, down from ¥111.92 late Tuesday.
Concerns about Europe’s debt challenges took center stage again Tuesday, when Moody’s Investors Service on Tuesday cut Ireland’s foreign- and local-currency government bond ratings by one notch to speculative or “junk” grade of Ba1, from Baa3. Read more about Moody's Ireland downgrade to junk.
But the euro gained a bit of cross-trading traction from the dollar’s drop against the yen. The euro EURUSD +0.09% changed hands at $1.4012, rising from $1.3975 late Tuesday, a day on which it traded as low as $1.3836, according to FactSet Research — its weakest level in nearly four months.
The dollar index DXY -0.12% , which measures the U.S. unit’s performance against a basket of six other major currencies, slipped to 75.861 from 76.028 late Tuesday.
The Australian dollar AUDUSD +0.23% rose to $1.0634, from $1.0603 late Tuesday.
But the dollar rose against the British pound GBPUSD +0.03% , which bought $1.5938, compared with $1.5994 Tuesday.
Lisa Twaronite is MarketWatch's Tokyo bureau chief.
