CURRENCIES&BONDS/ Dollar flirts with 86 yen level in TOKYO on expectations of yen correction
The dollar hit a 27-month high close to 86 yen in Tokyo trading on Thursday, as new Finance Minister Taro Aso fueled market expectations of a continued weakening of the yen.
At 5 p.m., the dollar was quoted at 85.64-64 yen, up from 85.35-35 yen at the same time on Wednesday. The euro was at 1 dollars.3247-3252, up from 1 dollars.3195-3197, and at 113.46-49 yen, up from 112.66-66 yen. The U.S. currency briefly advanced above 85.80 yen, marking the highest level since Sept. 17, 2010. The euro, meanwhile, temporarily stood above 113.50 yen for the first time since Aug. 4, 2011.
At his inaugural press conference after taking office Wednesday, Aso said the new government will take "effective measures" to deal with the strong yen versus other major currencies.
He also expressed willingness to go beyond the current ceiling of 44 trillion yen in the annual issuance amount of government bonds to draw up a large-scale supplementary budget for fiscal 2012.
After the administration of Prime Minister Shinzo Abe was launched Wednesday, "there are persistent hopes that the yen's strength will be corrected, and even position-adjustment dollar selling [against the yen] has hardly been seen," said an official at a major Japanese bank.
Key JGB yield hits 3-month high
Japanese government bond prices dropped further in Tokyo on Thursday amid the stock market's unabated strength, pushing up the key 10-year JGB yield to the highest level in about three months.
In late interdealer trading in cash JGBs, the yield on the latest 326th 10-year issue with a 0.7 percent coupon came to 0.8 percent, a level unseen since Sept. 21. The yield stood at 0.785 percent late Wednesday.