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Yen hits 15-year high against US dollar and euro

Tuesday 24th August 2010
The Japanese yen has hit a 15-year high against the dollar and a nine-year peak against the euro on as investors tested the resolve of Japanese authorities to intervene and stem the yen's steady rise.

Falls in stock markets also helped buoy the yen while narrowing yield differentials between U.S. Treasuries and Japanese government bonds dragged the U.S. dollar down against the yen.

The euro fell to as low as 106.80 yen, its lowest since November 2001, having fallen below a support level of  around 107.27 yen. The euro fell to a six-week low against the dollar of $1.2614.

With the yen hitting a nine-year peak against the euro and a 15-year high against the dollar, traders were wary about the potential for measures by Japanese authorities to stem the yen's rise.

Analysts say the most likely response from Japanese authorities may be for the Bank of Japan to increase the size or extend the duration of its three-month fixed rate fund supply operation.

But traders were sceptical that Japanese authorities would resort to yen-selling intervention unless the currency's rise picks up more speed.

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