The greenback has been hammered on foreign exchange markets since the Federal Reserve on Wednesday lowered its interest rate forecasts for this year, citing weak global growth and the recent turbulence across markets.
The dollar broadly retreated against higher-yielding emerging currencies on Friday and continued its slide against the yen, amid speculation among analysts that the Bank of Japan may intervene to halt the safe-haven unit’s gains.
The strength of the yen has rattled Japanese central bankers who, at the end of January, announced a shock decision to take interest rates into negative territory as they struggle to kickstart inflation and economic growth.
“In the near term, the Ministry of Finance –- responsible for currency policy in Japan –- will be increasingly concerned about the strength of the yen,” Mansoor Mohi-uddin, Singapore-based senior markets strategist at Royal Bank of Scotland Group, told Bloomberg News.
“Any further sharp declines in the dollar into a lower 105-to-110 range now will substantially increase the risk of the authorities intervening to counter the rise of the yen.”
On Friday the dollar bought 111.35 yen, down from 111.44 yen in New York — where it at one point plunged as low as 110.67 yen, its lowest since October 2014. It is also well off the 113.71 yen Wednesday in Asia before the Fed decision.
Japan’s exporters repatriating overseas profits in March as the start of a new fiscal year in April approaches have contributed to the strengthening of the yen, said Ayako Sera, a market strategist at Sumitomo Trust Bank.
“I think the appreciation of the yen is temporary and in April the yen will stabilise,” Sera told AFP.
The greenback also pulled back against emerging market units, with the South Korean won up one percent, the Malaysian ringgit 0.02 percent higher and the Taiwan dollar up 0.28 percent.
The euro fell to $1.1311 and 126.01 yen from $1.1317 and 126.12 yen in US trade on Thursday.