The yen strengthened against the dollar for Account forex trading, surging to a post-World War II high, on speculation Japan will delay intervention to limit the currency’s advance as the nation struggles to avert disaster at a nuclear-power plant.
The yen soared 4.5 percent in 26 minutes as markets closed in New York and re-opened in Asia amid speculation automated trades to limit losses were taking place.
The yen reached 76.36 per dollar before erasing its gains. The currency resumed its rally as Finance Minister Yoshihiko Noda said Group of Seven officials will meet tomorrow to discuss the aftermath of last week’s earthquake in Japan. The Swiss franc strengthened on demand for a haven and the New Zealand dollar fell.
The yen was 1.4 percent stronger at 78.51 as of 7:04 a.m. in New York versus 79.59 yesterday. Japan’s currency advanced to 109.94 per euro from 110.62, after climbing to 106.61, the strongest since Sept. 13. The euro appreciated 0.9 percent against the dollar to $1.4019, after rising to $1.4053, the highest since Nov. 8.
One-month implied volatility for the dollar-yen jumped 28 percent to 18.06, the highest since March 2009. Volatility was at 8.50 on March 10, a day before the magnitude-9 earthquake hit. Implied volatility is a measure of expected price swings and the key gauge for option prices.
IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, fell as much as 1.1 percent to 75.848 in the biggest intraday decline since Jan. 13.
The G-7 discussions will begin at 7 a.m. Tokyo time and encompass currencies, Noda told reporters in the capital today. Japan will brief officials on the damage to the economy, he said. Noda declined to comment on any possible intervention.
Japanese Economic and Fiscal Policy Minister Kaoru Yosano urged calm trading of the yen and said he hopes officials from the G-7 nations will express unity during talks tomorrow. Yosano was speaking at a press briefing in Tokyo today.
The Bank of Japan sold 2 trillion yen ($25 billion) in September to slow the currency’s appreciation, its first such action since 2004.
The central bank added 6 trillion yen to the financial system in a one-day operation today, bringing total emergency injections this week to 34 trillion yen.
The yen has been supported by speculation that local insurers and investors are redeeming overseas assets to pay for damages and reconstruction.
The yen’s surge earlier helped it surpass the previous high of 79.75, reached in April 1995 in the wake of an earthquake that devastated the city of Kobe.
The Australian and New Zealand dollars weakened as the Nikkei 225 Stock Average fell as much as 5 percent, damping demand for higher-yielding assets for Introducing brokers forex .
Switzerland’s franc advanced to 89.11 centimes per dollar, a record high, before trading 0.7 stronger at 90.22. The Swiss central bank left its key interest rate at 0.25 percent today, as expected by all 20 economists in a Bloomberg News survey. The currency appreciated versus all major counterparts but the yen.