Yen sinks to 15-year low vs euro, Aussie jumps as central banks diverge
Timilehin Adejumobi
1 min read
Banknotes of Japanese yen are seen in this illustration picture taken September 22, 2022. REUTERS/Florence Lo/Illustration
The yen continued its steep descent on Tuesday, reaching a 15-year low to the euro, as the implications of a steadfastly dovish Bank of Japan continued to reverberate days after the decision.
Meanwhile, the Aussie dollar leapt to a one-week high after the Reserve Bank of Australia (RBA) surprised with a rate hike and signalled more tightening may come.
The central bank lifted the cash rate to 3.85% and said “some further” tightening may be required to ensure that inflation returns to target in a reasonable timeframe.
The Australian currency climbed 1% to just below 67 U.S. cents for the first time since April 25, after being mired near 66 cents for most of the past week.
“I would think the RBA now thinks they need to see a 4 in front of the cash rate before thinking they might be done,” said Ray Attrill, head of FX strategy at National Australia Bank.
“Certainly the data flow since April has been on the strong side,” he added. “It’s very probable that another one is to come, though whether it’s as soon as June remains to be seen.”
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