New York: The Japanese yen pushed strongly higher Wednesday after a surprising warning by Federal Reserve Chair Janet Yellen over rising risks in the global economy.
The yen -- seen as a safe haven in turmoil even as the Bank of Japan has adopted a negative interest rate policy -- shot up 1.5 percent against the dollar to its highest level in 15 months, at 113.40 yen.
And it surged to 127.99 yen against the euro, up 1.6 percent.
While Yellen made no explicit comments on Fed rate hike plans, her description of clouds looming over the US economy was taken as no rate increase in the immediate future.
"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar," she told Congress.
"These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market."
Initially the dollar pushed up on her comments, but by late in the day, the greenback dropped back and was a net loser against the euro.
Kathy Lien of BK Asset Management said the first reaction was because Yellen, by making no explicit comment on it, effectively left a March rate hike on the table.
"Investors initially bought dollars after Yellen's testimony because she hadn't cooed loud enough. But by the end of the New York session they realized that chances are the Fed won't be pulling the trigger next month," she explained.
AFP
