Yen Rally Hits Pause as Importers Snap Up Dollars
The Japanese yen's rally paused in Tokyo foreign exchange trading on the morning of the 20th, hovering around the ¥158 range. The dollar-yen pair stood at ¥158.41-42, representing a 76-sen appreciation of the yen and depreciation of the dollar compared with 5:00 p.m. the previous day.
Market observers noted that real demand for yen-selling and dollar-buying by Japanese importers was capping the yen's upside. The prior day's sharp rally in overseas markets carried over momentum to the low ¥158 range, but it struggled to extend gains past ¥158.51 shortly after 10:00 a.m.
The yen surged on the previous day after the U.S. Treasury Department announced it would raise the cap on Treasury buybacks from $2 billion to at least $4 billion. Against a backdrop of falling long-term U.S. yields, the yen was bought aggressively from the ¥159 range to around ¥158.04.
Rising crude oil futures amid uncertainty over the Middle East situation are also weighing on the yen. Japan's trade balance showed a deficit of ¥634.5 billion in July, exceeding market expectations and prompting yen selling.