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. Last Updated: 07/27/2016

Yen Posts Gains on Dollar




An apparent shift in Japanese policy and the report of a record U.S. trade deficit helped send the dollar lower Thursday against the Japanese yen and the euro.


But the dollar, despite its recent 4 percent plunge against the yen, remains healthy against the world's other major currencies. Against the euro, which was predicted by many analysts to rally after its January debut, the dollar is up almost 10 percent this year. The dollar also rose Thursday against the currencies of Canada and Mexico, two major U.S. trading partners. Adjusted for trade patterns, the dollar is just above its 20-year average value against all of its trading partners, Chase Manhattan Bank said.


"There has not been across-the-board selling against the dollar,'' Paul Podolosky, a currency strategist at BankBoston said.


Instead, the sell-off of the dollar against the Japanese yen refocused attention on the dollar.


The dollar sell-off and yen rally began in early July when the dollar was worth about 122 yen. The value of the dollar against the yen declined more than 9 percent since then. The driving force has been the move by big institutional investors back into the Japanese stock market, which has soared this year. The move was prompted by expectations that the Japanese economy is turning around, based so far on just one quarter's economic data.


The move this week was set off by comments from Japanese officials that analysts interpreted to indicate that the government is not ready to intervene in the currency markets to support the yen. That is a switch from a policy of aggressive intervention to weaken the yen earlier this summer. In June and July, the Japanese sold yen for dollars six times in order to maintain the value of the yen.