The yen strengthened against the dollar, surging to a post-World War II high, on speculation Japan will delay intervention to limit the currency’s advance as the nation struggles to avert disaster at a nuclear-power plant.
The yen soared 4.5% in 26 minutes as markets closed in New York and re-opened in Asia. The yen reached 76.36 per dollar before erasing its gains. The currency resumed its rally as Finance Minister Yoshihiko Noda said policy makers from Group of Seven nations will meet tomorrow to discuss the crisis in the aftermath of last week’s earthquake.
More than 300 workers are racing to prevent a meltdown and spread of radiation from the crippled Fukushima Dai-Ichi power station north of Tokyo, an increase from a core group of 50 engineers yesterday, Tokyo Electric Power Co. said. The nation’s most powerful earthquake on record triggered a tsunami that killed thousands and damaged the reactors’ cooling systems.
“The strength of the yen in the near term will depend heavily on the ongoing developments in the nuclear power plant,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.. “If that situation were to escalate, then there’s a risk the yen could re-test the levels we saw overnight. The counter to that would be the risk of intervention by central banks has significantly heightened.”
The Bank of Japan sold 2 trillion yen ($25 billion) in September to slow the currency’s appreciation, its first such action since 2004.
The central bank added 6 trillion yen to the financial system in a one-day operation today, bringing total emergency injections this week to 34 trillion yen.
The Swiss franc rose versus all of its major peers on demand for a haven. The Swiss central bank left its key interest rate at 0.25% today, as expected by economists.
The Australian and New Zealand dollars weakened as the Nikkei 225 Stock Average fell as much as 5%, damping demand for higher-yielding assets.
EUR/USD fell to $1.3870 before recovered to $1.3992.
GBP/USD printed high on $1.6120 before retreated to $1.6080.
USD/JPY holds within the 150-points range, holding under pressure.
At 12:30 GMT US Jobless claims report for the week to 12.03 comes, followed by CPI report and Industrial production data at 12:15 GMT.
Philadelphia Fed index is due to come at 14:00 GMT.
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