Singapore/London: The yen fell against most of its major peers after Opec’s deal to cut oil production sparked a surge in stocks that hurt demand for assets viewed as havens.
Japan’s currency was also undermined, dropping for a third day against the dollar, amid optimism higher oil prices would help Bank of Japan governor Haruhiko Kuroda achieve his inflation goals. Malaysia’s ringgit led gains, while Norway’s krone touched the strongest level in a year versus the euro, before falling back as oil retreated. On Wednesday, crude jumped the most since April.
“The relatively unexpected production announcement from Opec has provided a risk-on rally," said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “That’s providing a little bit of impetus for dollar-yen. There are more positive influences in the inflation outlook by the uptick in oil prices, and that could help Kuroda at the margin to achieve his inflation target."
The yen dropped 1% to 101.66 per dollar as of 9:36 am in New York, after reaching the lowest level in a week, and depreciated 0.9% to 113.99 to the euro.
The ringgit climbed 0.4%, while the krone reached the strongest versus the euro since August 2015, before slipping 0.3%. Norway is western Europe’s largest oil producer and Malaysia is also a key exporter. Crude was little changed a day after advancing more than 5%.
Kuroda started on his quest toward a 2% inflation target by announcing massive asset purchases in 2013. He expanded those in 2014, before introducing negative interest rates this January. A benchmark gauge of Japan’s consumer prices slumped 0.5% in July from a year ago.
“The rally in oil prices will be welcomed by the BOJ as it will push up the central bank’s target measure of inflation at the margin if oil’s rally is sustained," said Mansoor Mohi-uddin, a Singapore-based strategist at Royal Bank of Scotland Group Plc. Bloomberg