Yen perks up on monetary easing hint

The yen rose as the former Bank of Japan executive Kazuo Momma indicated the county's central bank may drop a monetary easing measure this month.

"A recent drop in global bond yields has created favorable conditions for the BOJ to scrap its yield curve control program in April," said Momma.

"Long-term yields won't rise abruptly even if the YCC is scrapped [as long as the market environment continues to have little momentum for higher yields]," he added.

The yen at one point edged up 0.18 percent last night to 131.47 per US dollar. Economists at HSBC (0005) said on Monday that the yen is back as the "safe haven" of choice, believing that local factors should provide support for the currency later in the year.

This came as Japan's services sector activity in March grew at its fastest pace in over nine years, a private sector survey revealed. The Jibun Bank Japan Services purchasing managers' index rose to a seasonally adjusted 55 last month - from February's 54 - marking the quickest rate of expansion since October 2013.

Meanwhile, the New Zealand dollar at one point jumped as much as 1.1 percent yesterday after the country's central bank unexpectedly raised interest rates by 50 basis points to a more than 14-year peak of 5.25 percent, saying inflation was still too high and persistent and kept the door open to further tightening.

The central bank's hawkish stance saw a number of economists revise their expectations, predicting it would increase the official cash rate or OCR to a peak of 5.5 percent. It has hiked rates by 500 basis points since October 2021, undertaking its most aggressive tightening streak since the OCR was introduced in 1999.

This came as Eurizon SLJ Capital chief executive Stephen Jen said the US dollar is vulnerable to sliding another 10 percent to 15 percent in the next year and a half as cooling inflation allows the US Federal Reserve to cut interest rates.

Meanwhile, gold extended a surge to a 13-month high of over US$2,000 (HK$15,600) after data showed the jobs market loosening, diminishing bets the Fed will hike interest rates again.

Staff reporter