Yen heads to 18-month high aganst dollar

The yen pushed towards an 18-month high against the dollar Tuesday as investors seek refuge from an equity market sell-off and expectations of a near-term US interest rate hike fade.

Strong US jobs and manufacturing data last week were not enough to fire up the greenback after the Federal Reserve’s earlier comments that borrowing costs would remain unchanged until the second half of the year.

The dollar changed hands at 110.84 yen in Tokyo afternoon trade, down from 111.28 yen Monday in New York. The figure was just off the 110.67 yen reached in mid-March, which marked the dollar’s lowest level since October 2014.

The euro weakened to 126.30 yen from 126.79 yen and to $1.1386 from $1.1394.

On Tuesday, the third anniversary of the Bank of Japan’s launch of its unprecedented stimulus programme, governor Haruhiko Kuroda repeated a warning that the central bank could not reboot Japan’s economy by itself.

The remarks appeared to be another call for the government to push through with promised reforms to the highly regulated economy as part of its growth blitz.

“We can’t solve all problems with monetary policy alone,” Kuroda told a parliamentary committee.

The BoJ’s easing policy helped to sharply weaken the yen initially, lifting exporters’ profits and setting off a stock market rally.

But the yen has been gaining strength owing to doubts about the growth drive, fears over the state of the global economy and a fall in oil prices.

Traders tend to buy the yen in times of uncertainty or turmoil.

“Lower commodity prices and worries of Fed rate-hike prospects have caused emerging-market currencies to weaken again,” Sim Moh Siong, a foreign-exchange strategist at Bank of Singapore, told Bloomberg News.

“The run in emerging markets has come to a point where the central banks may not be too comfortable with the strength.”

The South Korean won was hardest hit, shedding 0.81 percent against the greenback, while the oil-linked Malaysian ringgit lost 0.41 percent.

The Singapore and Taiwan dollar, Indonesia’s rupiah and the Thai baht also declined.