Dollar hits 7.5-month high above 145 yen line on strong U.S. data

Tokyo – The U.S. dollar briefly rose to a seven-and-a-half-month high above the 145 yen line Friday morning in Tokyo after fewer-than-expected U.S. jobless claims fueled speculation about prolonged interest rate hikes.

The yen hit its lowest level against the dollar since November, with the latest revision of U.S. first-quarter gross domestic product also stronger than projected.

The yen’s depreciation is “due to differences in monetary policies with not only the United States but also Europe,” said Yuji Saito, head of the foreign exchange department at Credit Agricole Corporate & Investment Bank in Tokyo, referring to continued interest rate hikes by the European Central Bank.

The yen’s depreciation has prompted vigilance against a possible intervention by the Japanese government, which conducted a yen-buying, dollar-selling operation for the first time in 24 years on Sept. 22 last year when the Japanese currency crossed the 145 line against the dollar.

After hitting the threshold Friday, the dollar retreated to the upper 144 yen level, with Japanese Finance Minister Shunichi Suzuki warning that Japan stands ready to respond appropriately to excessive volatility.

But some dealers said it is still too early to expect intervention.

“I don’t think there will be immediate intervention, but there is a possibility that the warnings will become stronger, for example, through rate checks or similar measures,” said Saito.

The so-called rate check, in which dealers are asked about foreign exchange trading, is a practice seen as a precursor to a currency market intervention.

At noon, the U.S. dollar fetched 144.75-76 yen compared with 144.75-85 yen in New York and 144.31-33 yen in Tokyo at 5 p.m. Thursday.

The euro was quoted at $1.0866-0867 and 157.29-31 yen against $1.0858-0868 and 157.30-40 yen in New York, and $1.0915-0917 and 157.52-56 yen in Tokyo late Thursday afternoon.

Tokyo stocks were lower in the morning amid caution on the last trading day of the quarter, with investors awaiting key U.S. inflation data due out later in the day.

The 225-issue Nikkei Stock Average fell 175.15 points, or 0.53 percent, from Thursday to 33,058.99. The broader Topix index was down 17.25 points, or 0.75 percent, at 2,279.00.

Decliners were led by land transportation, service and pharmaceutical issues.

Chip-related shares were weak as investors locked in gains after the tech-heavy Nasdaq ended flat overnight, with Tokyo Electron dropping 180 yen, or 0.9 percent, to 20,595 yen, and Shin-Etsu Chemical down 48 yen, or 1.0 percent, to 4,739 yen.

But Takashimaya bucked the trend to become one of the top gainers on the Nikkei, surging 112 yen, or 6 percent, 1,981 yen, after the department store on Thursday revised upward its profit forecast for the year ending February 2024, citing recovery in inbound tourism and structural reforms.