TOKYO: Japan’s finance minister on Tuesday warned of a rapid rise in the yen after the dollar plunged to a seven-month low against the unit on fears over China’s economy and global growth.
In Tokyo the greenback fetched 119.60 yen following the comments compared to 118.51 yen in New York, where it fell at one stage to 116.18 yen, its lowest level since February. The dollar was above 124 yen last week.
The euro was stronger at 137.95 yen from 137.55 yen in US trading, while it slipped to $1.1538 against $1.1606.
A bloodbath on global equity markets driven by fears over a slowdown in China—and the broader impact on the global economy—pushed traders into the yen, which is seen as a safe haven in times of turmoil.
China’s shock move earlier this month to devalue the yuan, widely seen as a bid to boost exports, shocked markets and fuelled fears about the world’s number two economy.
Japan’s Finance Minister Taro Aso on Tuesday cautioned over the yen’s rapid rise which he described as “rough,” and criticized China’s moves as “stirring fears” in global markets.
A rapid rise in the yen hurts major Japanese exporters such as Toyota and Sony by denting their competitiveness overseas and shrinking the value of repatriated profits.
Economy Minister Akira Amari called for a “cool-headed approach” but added that the shift into the yen “reflected the strength of Japan’s economic fundamentals.”
“The foundations of the global economy have not been shaken—a cool-headed approach is necessary,” he told reporters.
“We’ve seen government officials talking about moves being rapid, so we’re getting the first hints basically of the government getting a little bit concerned about the extent of yen strength here,” Ray Attrill, global co-head of currency strategy at National Australia Bank, told Bloomberg News.
In other trading, Russia’s currency fell again after the euro passed the symbolic 80-ruble mark on Monday.
The 19-nation currency rose to 81.25 rubles on Tuesday, while the dollar was also up at 70.37 rubles.
The dollar mostly weakened against other Asia-Pacific currencies.
It slipped to 1,195.53 South Korean won from 1,198.98 won, to Sg$1.4065 from Sg$1.4134, to Tw$32.63 from Tw$32.91, and to 35.64 Thai baht from 35.79 baht.
The greenback rose to 14,076.90 Indonesian rupiah from 14,032.00 rupiah and to 66.52 Indian rupees from 66.49 rupees.
The Australian dollar slipped to 72.06 US cents from 72.30 cents, while the Chinese yuan fetched 18.59 yen against 18.91 yen.