Yen rising on rate speculation
The yen rose for a third day against the dollar yesterday as analysts speculated that the Bank of Japan (BoJ) will increase interest rates this month, curbing carry trading.
The dollar traded at ¥118.33 in early foreign exchange trading on Monday while the euro was valued at ¥153.84.
The currency will reach ¥152.50 on the euro and ¥117 on the dollar by the end of the week analysts predicted, following gains of 1.9 per cent on the euro last week.
Of 14 analysts polled by Bloomberg, 11 predicted a quarter-point rise to 0.5 per cent during January. "The yen is destined for some good times," said one strategist.
An increase in the BoJ rate would curb the carry trade, in which speculators borrow low-interest currencies to borrow in higher-yielding currencies, which has held the yen low.
The bank last increased its rate from near zero per cent to 0.25 per cent in July. Trading in Japan will remain low today because of a public holiday, however.