By Hiroyuki Kachi
The dollar hit its highest level in more than 12 years against
the yen in Asia Thursday, with the U.S. currency's rapid pace of
gains putting market participants on alert for any signs of
discomfort from U.S. and Japanese government officials.
Building upon its overnight momentum, the greenback rose at one
point midday in Tokyo to Y124.30, its highest since Dec. 5, 2002
before slightly weakening to Y124.12 around 0450 GMT. That is
higher than Y123.67 late Wednesday in New York.
"I think that the pace of gains are a bit rapid," said Shinji
Kureda, head of the FX trading group at Sumitomo Mitsui Banking
Corp. He added that the dollar's gains come despite a lack of fresh
trading cues, suggesting investors are filled with certainty about
a rebound in upcoming U.S. economic data.
"I can't think of any other reason than buying by people who
feel confident about a rebound" in the data, including U.S.
employment figures due out on June 5, said Mr. Kureda.
Investors are going to be intently watching to see how currency
authorities react to the rally. They will be paying particularly
close attention to any kind of in-depth remarks coming from top
officials at the coming Group of Seven finance ministers meeting in
Germany.
Japan's top government spokesman stopped short of saying that
the latest fall in the yen wasn't rapid. Chief Cabinet Secretary
Yoshihide Suga said at his regular news conference that the
government will continue to watch the foreign exchange market
closely, adding that there was a G-7 consensus that rapid moves in
exchange rates were "undesirable."
Asked whether he still regarded the dollar's movements against
the yen as being "not rapid"--the description he had been using
since Monday--Mr. Suga reiterated the G-7 position without stating
his own view.
"The dollar was bought against the yen as the currency market
interpreted his remarks as not sending a strong message to keep the
dollar's rise in check," said Yuji Saito, executive director of
foreign exchange at Crédit Agricole Corporate & Investment
Bank.
Many market participants are betting that dollar will broadly
appreciate even further on the back of diverging monetary policy in
the U.S. and Japan.
A soft patch in the U.S. economy since the beginning of this
year has made it unclear when the Federal Reserve would raise
short-term interest rates.
But a string of encouraging signs for the U.S. economy along
with remarks by Fed Chairwoman Janet Yellen reminded investors of
the high likelihood that the Fed would raise rates long before
rival central banks. In fact, Ms. Yellen said Friday the central
bank is on track to raise interest rates sometime this year.
Among other currency pairs, the euro was at $1.0909 from
$1.0904, while the common currency was at Y135.40 from Y134.86.
On Wednesday, Greek Prime Minister Alexis Tsipras said the
country is close to an agreement with its international creditors
over its rescue program.
The WSJ Dollar Index, a measure of the dollar against a basket
of major currencies, was up 0.14% at 87.37.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 124.12-13 123.66-67 +0.37 124.29 123.50 +3.67
EUR/USD Euro 1.0908-11 1.0903-06 +0.05 1.0922 1.0891 -9.83
GBP/USD U.K. 1.5353-55 1.5354-56 -0.01 1.5367 1.5339 -1.44
USD/CHF Switzerland 0.9480-84 0.9493-97 -0.14 0.9505 0.9477 -4.64
USD/CAD Canada 1.2470-75 1.2450-55 +0.16 1.2477 1.2443 +7.32
AUD/USD Australia 0.7679-83 0.7726-30 -0.61 0.7761 0.7672 -6.00
NZD/USD New Zealand 0.7236-42 0.7260-66 -0.33 0.7272 0.7229 -7.13
Euro Rate
EUR/JPY Japan 135.39-43 134.83-87 +0.42 135.50 134.74 -6.58
Source: ICAP PLC
Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com