NEW YORK: The yen rose broadly on Monday as investors sought its safety following a statement from the Group of 20 countries that offered no concrete action to address concerns about slow growth and low inflation.
The Japanese currency has fully retraced Friday's decline and was on track to post its best monthly performance against the dollar in more than seven years. Against the euro, the yen was on pace to record its largest monthly percentage gain in more than a year.
Weaker-than-expected data on the Chicago manufacturing sector and US pending home sales data also pushed the dollar lower versus the yen.
But it was the G20 statement that drove the yen to a great start on Monday. Finance ministers and central bank governors from the G20 countries tried to ease fears about global growth prospects and also said they would consult closely on foreign exchange markets.
But analysts believed world leaders remained far from formulating concerted action to counter trends in the currency market, or doing anything to boost global growth.
"The (G-20) statement was seen as not much more than lip service and is not expected to result in any meaningful policy action," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"The yen, as a result, remains well-bid amid a generally risk-off mood in global markets." In mid-morning trading, the dollar fell 1.0 percent against the yen, traditionally investors' safe haven of choice in times of global stress, to 112.87 yen.
The euro also slid against the yen, falling 1.5 percent to 122.68 yen.
A Chicago manufacturing report for February, which showed the index fell to 47.6 after a rebound to 55.6 in January, pushed the dollar to session lows against the yen.
The US pending home sales report, which fell an unexpected 2.5 percent last month, also weighed on the greenback.
The euro fell 0.6 percent against the dollar to $1.0867 after a low first official estimate of euro zone inflation showed consumer prices in Europe fell again.
That pushed the dollar index up 0.2 percent at 98.325.
The fall in the flash reading of euro zone inflation to -0.2 percent boosted expectations that the European Central Bank will have to ease policy aggressively next month.
Also on Monday, China's surprise cut of the required reserve rate for banks prodded the yuan lower and drove the Australian dollar higher.
The Aussie was last up 0.1 percent at US$0.7134.
Comments
Comments are closed.