The yen rebounded from near a seven-year low versus the dollar amid signs its decline had become overstretched and as Bank of Japan Governor Haruhiko Kuroda said the economy is on track to achieving policy makers’ 2 percent inflation target.
Japan’s currency rose against all major peers as a gauge of momentum signaled its drop versus the greenback since the end of last month has been too much, too soon. The BOJ surprised markets on Oct. 31 by expanding monetary stimulus, two days after the Fed ended its bond-buying program. New Zealand’s dollar held its first decline in three days before a quarterly Reserve Bank survey of inflation expectations.
The yen gained 0.2 percent to 118.02 per dollar at 10:20 a.m. in Tokyo from yesterday, when it fell 0.4 percent. It reached 118.98 on Nov. 20, the weakest since August 2007. The yen jumped 0.3 percent to 146.70 per euro, after yesterday’s 0.8 percent slide. The euro traded at $1.2432 from $1.2442.
Kuroda said in a speech in Nagoya today that core consumer-price gains are likely to reach 2 percent in or around the fiscal year starting next April, and that efforts to end Japan’s deflationary mindset are progressing.
The BOJ last month lifted the annual target for enlarging the monetary base to 80 trillion yen ($680 billion), from 60 trillion yen to 70 trillion yen. The policy board voted to retain the plan at the end of a two-day meeting on Nov. 19.
The yen’s 14-day relative-strength index versus the dollar was at 24, and has been below the 30 line that signals to some traders that an asset is oversold every day since Oct. 31.
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