Yen declines on year-end U.S. dollar demand
Tuesday,
31-Mar-2020
02:21 PM (IST)
The dollar rose against the yen on Tuesday amid fiscal year-end demand by Japanese companies and the Chinese yuan stood firm after a survey showed manufacturing returned to growth in March. Tuesday is the last trading day of Japan’s fiscal year and the end of the quarter for major investors elsewhere, which has fueled some volatility as big currency market players closed their books. The bulk of those positioning changes caused the dollar to strengthen. Against a basket of six other currencies =USD, the dollar rose 0.4%to 99.5. It reached 102.99, its highest in more than three years, earlier this month as a global market selloff fueled a rush for dollars. Dollar demand has ebbed, but analysts are still forecasting more dollar gains. For the quarter, the dollar was the biggest gainer, rising 2.5%. The Norwegian crown was the biggest loser, falling 19% versus the greenback. The dollar rose 0.52% to 108.38 yen on Tuesday. The Chinese yuan was the only currency to buck the trend, holding firm against the dollar in both the onshore and the offshore market. China’s official manufacturing Purchasing Manager’s Index unexpectedly showed activity swung to expansion in March. China’s economy is still expected to see a large contraction in the first quarter. The euro fell 0.35% to $1.1003 and sterling declined 0.88% to $1.2310. Broader market gauges of dollar funding and market volatility also declined from multi-year highs on Tuesday. Three-month currency swaps in euro-dollar flipped into a rare premium against the dollar.
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