Yen rallies against Dollar for fourth straight day

21 Nov 2023

The Japanese Yen rallied against the Dollar for the fourth consecutive day on Tuesday, as investors braced for the chance of the Bank of Japan tightening monetary policy next year whilst the US Federal Reserve does the opposite.

The Dollar fell to its lowest level since the middle of September at 147.16 Yen, and at the time of writing, was down 0.61% at 147.45.

Whereas the Dollar index – measuring the greenback against six peers - fell to its lowest since the end of August at 103.17 and was last down 0.13% at 103.32, Reuters news agency reports.

"There has been a lot of excitement, momentum is building, about the ability of the Bank of Japan to exit its ultra-loose monetary policy... possibly next year, ending negative interest rates," according to the head of FX strategy at Rabobank, Jane Foley.

"The Dollar is weaker, and this, I think, is just the catalyst for the market making bets on how far Dollar-Yen can really move," she added.

Elsewhere, the Euro increased to $1.0966 on Tuesday, its highest since the middle of August, and at the time of writing, was marginally higher at $1.0944.

The Pound gained 0.2% to $1.253 after reaching a two-month high of $1.254. On Monday, Bank of England governor Andrew Bailey said it is "far too early to be thinking about rate cuts" in the UK.

Furthermore, a Chinese Yuan rally is also weighing on the greenback, with the Yuan edging closer to a four-month high of 7.13 per Dollar.

The midpoint of the Yuan's trading band was set at its strongest since 7th August by China's central bank. This currency fixing, coupled with upcoming property sector support reported by Bloomberg, bolstered stocks, according to National Australia Bank strategist Rodrigo Catril.

Whereas US economist at lender SEB, Elisabet Kopelman, said: "Strong risk appetite and speculation about future interest rate cuts are not a good environment for the Dollar, which has come under pressure against a number of Asian currencies this morning."