Thursday, October 14, 2010
The dollar hit a fresh 15-year low of 81.28 yen in Tokyo trading hours Thursday amid growing expectations that the US Federal Reserve will adopt further easing measures to boost the economy.
Markets are caught between speculation that the Fed will take action, weakening the dollar, and Japan's repeated threats to intervene again in currency markets to weaken the yen and bolster the greenback, dealers say.
A decision by Singapore's central bank to tighten monetary policy also added to the broader selling pressure on the US dollar, dealers said.
Japan stepped into currency markets in September for the first time in six years and has repeatedly warned it is ready to do so again if necessary to protect its export-led recovery.
Tensions have flared over the issue of currencies, which is set to dominate a Group of 20 summit of the world's top economies in South Korea next month as nations look to curb capital inflows and safeguard exports.
On Wednesday Japan said South Korea would face scrutiny over its repeated moves to weaken the won and called on China to act "responsibly" amid escalating fears of a global currency war.
Despite Japan having itself intervened, it argues that it acted only once to prevent rapid movement, while accusing South Korea of repeated interventions to weaken the won and suggesting Beijing has made slow progress with yuan reform.