Dollar Steady Above 150 Yen as Yuan Falls

On Tuesday, the dollar rose steadily above 150 yen amid expectations of higher US interest rates for a longer period, against the backdrop of economic stagnation in Japan and market doubts about Tokyo’s plan to soon end its monetary easing policy.

China caught traders’ attention early on Tuesday, as it lowered its key mortgage reference rate.

While this reduction is part of efforts to stimulate credit demand and revive the real estate market, the yuan also fell to its lowest level in three months, prompting investors to call for increased support to boost fragile confidence.

The dollar rose by 0.2 percent to 150.42 yen after already surpassing the key 150 yen level for six consecutive sessions, prompting warnings from Japanese officials to maintain currency stability.

Stronger-than-expected US producer and consumer prices last week increased market expectations for how close the Federal Reserve (the US central bank) is to lowering interest rates and by how much this year.

On the other hand, Japan’s unexpected economic recession in the last quarter of last year, driven by declining consumption and capital spending, led investors to rethink the possibility of an imminent end to the Bank of Japan’s extremely loose monetary policy.

The euro fell by 0.1 percent to $1.0768 while the British pound dropped to $1.25795. The yen rose by 0.1 percent to 150.08 to the dollar but remains down by about six percent for the year.

The dollar index, which measures the US currency’s performance against six major currencies, rose by 0.8 percent to reach 104.37.