Updated at 1:13 p.m., Monday, February 19, 2007
Yen falls from six-week high against the dollar
Bloomberg News Service
The yen fell from a six-week high against the dollar after Japanese government ministers including Prime Minister Shinzo Abe said the Bank of Japan should make an "appropriate" decision on interest rates this week.Investors see a 61 percent chance the central bank will increase borrowing costs to 0.5 percent at the end of a two-day meeting starting tomorrow, according to calculations by Credit Suisse Group. Japan's government kept its assessment of the economy unchanged today, signaling that it considers the country isn't ready for an interest-rate increase.
"The market remains very divided on the BOJ's interest-rate decision this week," said Tania Kotsos, a currency strategist at RBC Capital Markets Ltd. in London. The government comments "could be a subtle implication not to hike rates. We would use this as an environment to sell the yen."
The yen traded at 119.66 per dollar at 4:29 p.m. in London compared with 119.43 in New York on Feb. 16, when it reached 118.99, the strongest since Jan. 9. Japan's currency was also at 157.29 per euro from 156.89.
The central bank will "take into consideration all factors including risks," Abe told reporters in Tokyo today. "Monetary policy is the purview of the Bank of Japan." The government and the central bank share the same goals on the economy, and communicate well, Abe added.
Twenty-six of 49 economists predict Bank of Japan Governor Toshihiko Fukui and his colleagues will keep the key overnight lending rate at 0.25 percent on Feb. 21, according to a Bloomberg News survey.
