AGL 40.00 Decreased By ▼ -0.01 (-0.02%)
AIRLINK 126.91 Decreased By ▼ -1.08 (-0.84%)
BOP 6.68 Increased By ▲ 0.08 (1.21%)
CNERGY 4.50 Decreased By ▼ -0.10 (-2.17%)
DCL 8.52 Increased By ▲ 0.04 (0.47%)
DFML 41.50 Increased By ▲ 0.02 (0.05%)
DGKC 86.70 Increased By ▲ 0.12 (0.14%)
FCCL 32.33 Increased By ▲ 0.19 (0.59%)
FFBL 64.81 Decreased By ▼ -0.61 (-0.93%)
FFL 10.26 Increased By ▲ 0.01 (0.1%)
HUBC 109.57 Decreased By ▼ -0.92 (-0.83%)
HUMNL 14.80 Increased By ▲ 0.05 (0.34%)
KEL 5.04 Decreased By ▼ -0.09 (-1.75%)
KOSM 7.45 Increased By ▲ 0.33 (4.63%)
MLCF 41.25 Decreased By ▼ -0.40 (-0.96%)
NBP 60.49 Increased By ▲ 0.40 (0.67%)
OGDC 189.73 Decreased By ▼ -4.96 (-2.55%)
PAEL 27.76 Decreased By ▼ -0.19 (-0.68%)
PIBTL 7.79 Decreased By ▼ -0.21 (-2.63%)
PPL 149.73 Decreased By ▼ -1.44 (-0.95%)
PRL 26.70 Decreased By ▼ -0.18 (-0.67%)
PTC 16.00 No Change ▼ 0.00 (0%)
SEARL 86.02 Increased By ▲ 7.82 (10%)
TELE 7.70 Increased By ▲ 0.31 (4.19%)
TOMCL 35.40 Decreased By ▼ -0.27 (-0.76%)
TPLP 8.10 Increased By ▲ 0.19 (2.4%)
TREET 16.42 Increased By ▲ 0.53 (3.34%)
TRG 53.15 Increased By ▲ 0.39 (0.74%)
UNITY 26.10 Decreased By ▼ -0.45 (-1.69%)
WTL 1.25 Decreased By ▼ -0.02 (-1.57%)
BR100 9,871 Decreased By -49.2 (-0.5%)
BR30 30,554 Decreased By -197.7 (-0.64%)
KSE100 93,398 Increased By 173.4 (0.19%)
KSE30 28,943 Increased By 58.6 (0.2%)

LONDON/SINGAPORE: The yen slipped slightly on Wednesday after surging almost 4% in the previous session, when the Bank of Japan (BOJ) unexpectedly tweaked a key policy, allowing government bond yields more room to move.

The BOJ decided to change its “yield curve control” policy on Tuesday even as it kept broad policy settings unchanged. It is now letting 10-year yields move 50 basis points either side of its 0% target, wider than the previous 25 basis point band.

On Wednesday, the yen was down 0.13%, trading at 131.88 per dollar, not far off the four-month high of 130.58 touched on Tuesday, when the yen jumped 3.8% in its biggest one-day rise since 1998.

The surge was a sign that traders expect the BOJ to further tighten monetary policy in coming meetings, said Derek Halpenny, head of research at Japanese bank MUFG.

“The easiest way to express a view in this being the first step in a normalization process… was obviously in FX rather than in rates,” he said.

Elsewhere in currency markets, the euro was down 0.16% against the dollar at $1.061.

Sterling was down 0.68% to $1.211, with high government borrowing figures causing some nervousness.

The BOJ’s move marked a small step away from the central bank’s ultra-loose monetary policy.

Japan, long preoccupied with reviving price growth to avert a risk of deflation, has been an outlier this year. It has kept interest rates negative while other central banks have hiked hard to tame inflation and bolster domestic currencies against the mighty U.S. dollar.

“The market has interpreted the decision as step towards an eventual pivot from the current ultra-dovish monetary policy,” said Carol Kong, a currency strategist at the Commonwealth Bank of Australia.

She said traders are still digesting the change and the yen could continue to rise in the near term.

The Australian dollar rose 0.07% to $0.669, while the kiwi dropped 0.8% to $0.63.

The Antipodean currencies were wobbly after suffering big losses against the yen as rising Japanese bond yields threatened to kill “carry trade” flows into Australia and New Zealand.

Activity in currency markets was winding down on Wednesday ahead of the festive period, with trading volumes low.

The story of 2022 has been the strength of the dollar, which has surged as the U.S. Federal Reserve hiked interest rates at a rapid clip, luring investors back towards the country’s fixed income assets.

Yet the dollar index has dropped roughly 9% since hitting a 20-year high in September, with a sharp slowdown in U.S. inflation raising hopes that the Fed may soon end its tightening cycle.

The index, which measures the dollar’s performance against a basket of major currencies, was up 0.22% on Wednesday to 104.22. It remained around 8% higher for the year.

Many analysts expect the dollar to weaken further next year as inflation cools and the Fed’s rate hikes come to an end.

Goldman Sachs expects the euro to fall in the first three months of the year to $1.02, but to strengthen to $1.10 in 12 months’ time.

Comments

Comments are closed.