US dollar declines as China and Japan support their currencies

The dollar fell on Monday amid the risk of Japanese authorities intervening in the exchange rate and a Chinese government-led rise in the yuan.

According to Reuters, the yen rose about 0.1% and reached 151.29 to the dollar in the latest trading after reaching its lowest level in 4 months at 151.86 last week and near the lowest level in 32 years at about 152 to the dollar, which it recorded in 2022.

The rise in the yen helped push the dollar index down by 0.16 5 to 104.26 points after weekly gains of about 1% last week.

Japan’s Deputy Finance Minister for International Affairs said on Monday that the current weakness of the yen does not reflect the performance of the real economy, reinforcing what the country’s officials have adopted in the past few days of warnings about the currency’s decline.

The yen fell despite the Bank of Japan raising interest rates from negative territory last week. Traders believe that interest rates in Japan will remain at low levels for some time, which will maintain the large interest rate differentials with the United States and enhance the attractiveness of the dollar.

The Chinese yuan rose slightly on Monday, rising by approximately 0.2% in trading inside China to 7.21 against the dollar, and it also rose in foreign trading by about 0.4%.

The Chinese currency was under pressure due to high expectations in the market for increased monetary easing to support the second largest economy in the world.

These moves came in the wake of the Bank of Japan raising interest rates at its policy meeting this month.

European currencies regained some strength on Monday after falling last week as investors bought dollars on the basis that the Federal Reserve did not appear to be in a hurry to cut interest rates compared to some other banks.