The yen strengthened, heading for a seventh weekly gain against the dollar, as stocks fell and investors bet any attempt by the Bank of Japan to rein in the currency will have limited success.
The dollar was also poised for its biggest weekly loss against the euro since the 15-nation currency’s 1999 debut as the Federal Reserve cut its rate to a record low, reducing the appeal of U.S. assets. The yen, which reached a 13-year high against the dollar this week, rose even after the Bank of Japan lowered its benchmark rate to 0.1 percent from 0.3 percent and said it would buy commercial paper to boost corporate lending.
“There’s still a flight to liquid, safe currencies and it would take a significant amount of intervention to stop that trend,” said Geoff Kendrick, a senior foreign-exchange strategist at UBS AG in London. “Stocks gave back gains pretty quickly after the rate cut so markets resumed what have been the broader trends this year.”
The dollar fell to 88.62 yen as of 9:16 a.m. in London, from 89.43 yen yesterday in New York, on course for a 2.8 percent decline this week. It dropped to 87.14 yen on Dec. 17, the lowest level since 1995. The dollar traded at $1.4066 versus the euro, from $1.4240 yesterday, when it slumped to an 11-week low of $1.4719. The euro slid to 124.79 yen from 127.44 yen.
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