Dollar's plunge against the yen halted

THE DOLLAR'S plunge against the yen was halted yesterday as expectations of official intervention in the currency markets climbed to fever pitch.

"A sense of anticipation has built up over the past 24 hours that some kind of deal is in the pipeline," said Mark Cliffe, chief economist at ING Barings. "The danger is that if it isn't delivered the dollar will break below 100," he added.

The dollar rebounded more than 2 at one stage yesterday, and was 1.60 higher at just over 106 at noon in New York. Sterling briefly hit a new high of 63.76p against the euro.

The excitement was generated by a spate of comments from Japanese officials indicating that joint intervention to halt the yen's climb and dollar's fall would be on the agenda at next weekend's meeting of G7 ministers and central bankers in Washington. Keizo Obuchi, the prime minister, said co-operation would be needed to halt the rise in the yen. "We need to think of all possible measures," he said.

Takashi Nakanomyo, vice-minister at the Economic Planning Agency, said: "A rapid rise in the yen is unfavourable." He was echoing concern that the 12 per cent appreciation in the yen in little over a month would derail the economic recovery.

Lawrence Summers, the US Treasury Secretary, yesterday repeated his usual comment: "A strong dollar is very much in the interests of the US." But there was speculation that Japan's deputy finance minister discussed intervention with Treasury officials during a visit yesterday.

Analysts said the European Central Bank and EU ministers would also be concerned in case the euro was dragged towards dollar parity in the crossfire.

Traders remained sceptical about the impact of combined intervention even as they went on red alert for any sign of it. "I am sure G7 will issue a statement on the need for currency stability but it is what they do that matters," said David Brickman, an economist at Paine Webber.

The real test lay with the Japanese authorities, analysts said. Although the Bank of Japan has sold about $35bn-worth of yen in the past three months, it offset any impact on Japan's economy by "sterilising" the intervention. This involves selling an equal amount of short-term government bonds to ensure the intervention does not affect domestic money supply.

A credible deal to weaken the yen would have to involve an end to this sterilisation. Masaru Hayami, governor of the Bank of Japan, has refused to alter the policy of sterilisation. But it is clear he has come under government pressure to agree to a move that might be a precondition for US co-operation in currency market intervention.

Start your day with The Independent, sign up for daily news emails
Voices
Homeless Veterans charity auction: Cook with Angela Hartnett and Neil Borthwick at Merchants Tavern
charity appeal
Sport
Amir Khan is engaged in a broader battle than attempting to win a fight with Floyd Mayweather
boxing Exclusive: Amir Khan reveals plans to travel to Pakistan
Arts and Entertainment
Caroline Flack became the tenth winner of Strictly Come Dancing
tvReview: 'Absolutely phenomenal' Xtra Factor presenter wins Strictly Come Dancing final
Sport
Ched Evans in action for Sheffield United in 2012
footballRonnie Moore says 'he's served his time and the boy wants to play football'
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Amir Khan: 'The Taliban can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'

Amir Khan attacks the Taliban

'They can threaten me but I must speak out... innocent kids, killed over nothing. It’s sick in the mind'
Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture