TOKYO (Kyodo) – The US dollar climbed into the upper 115 yen range on Tuesday in Tokyo, its highest level since January 2017, as dollar purchases were fueled by increased risk appetite following a surge of Tokyo shares.
The dollar was trading at around 115.80 yen around 1:50 p.m. in Tokyo after hitting 115.28-38 yen in New York at 5 p.m. on Monday. Tokyo markets were closed Friday and Monday for the New Year and New Years holidays.
As of 2 p.m., the 225-issue Nikkei Stock Average was up 531.59 points, or 1.85%, as of Thursday to 29,323.30.
In addition to the rise in equities, the dollar rose against the yen amid rising expectations of an anticipated interest rate hike by the US Federal Reserve after an overnight rise in US Treasury yields, have said brokers.
“Treasury bond yields surged overnight, fueling expectations of a widening interest rate differential between the United States and Japan,” said Takuya Kanda, senior researcher at Gaitame. com Research Institute.
Japanese importers also bought the US currency for settlement, dealers said.
Kanda said the dollar will continue to be bought off as the US central bank is expected to raise interest rates several times this year.
A weaker yen allows exporters to earn more if they repatriate profits overseas and helps boost the competitiveness of Japanese-made products overseas, but this will likely lead to higher energy and fuel prices. food in the country, which will result in household squeeze.