Tokyo, Jan. 9 (Jiji Press)–The dollar is expected to remain under downward pressure next week, with players keeping a lookout for market interventions by Japan to arrest the yen’s advance.
Japanese monetary authorities are widely expected to continue stepping into the market after successive suspected actions this week, including a massive intervention on Friday that lifted the dollar by more than 2 yen to above 108 yen.
But with no end in sight to dollar selling by U.S. financial institutions, hedge funds and Japanese exporters, the U.S. currency is likely to remain top-heavy versus the yen and looks poised to test its record lows against the euro, dealers said.
Currency players and analysts expect the dollar to trade between 105.50 yen and 108.00 yen in the week of Jan. 13-16, against 107.02- 05 yen at 5 p.m. Friday. The Tokyo currency market will be closed Monday for a national holiday.
Makoto Kojima, executive director at the UBS AG group’s Tokyo branch, pointed out that market attention is now shifting to the Group of Seven finance meeting scheduled for Feb. 6-7 in Florida.
The Japanese monetary authorities appear set to stem a further fall of the dollar against the yen in the run-up period to the G-7 meeting, but given swelling dollar-short positions, the currency’s downtrend is unlikely to be reversed by the authorities’ successive interventions, Kojima said.
In the previous G-7 meeting in Dubai in September last year, finance chiefs and central bankers called for “more flexibility in exchange rates,” sparking a welter of dollar selling.
Major U.S. economic indicators due out next week include the November trade balance, to be released on Wednesday, and December retail sales on Thursday.
The euro is expected to trade between 1.26 dollars and 1.3 dollars next week, against 1.2720-2723 dollars at 5 p.m. in Tokyo on Friday.
Toshihiro Azuma, manager at Sumitomo Trust & Banking Co., said the euro may test highs near the 1.30-dollar line before the G-7 meeting.
Remarks from monetary authorities on exchange rate levels will be watched closely next week, he said.END
