Japanese tax report causes yen to rally
AFPTOKYO--The yen rallied in Asia on Friday, rebounding from the previous day's losses fuelled by a report that Japan would cut corporate taxes to offset the impact of an expected hike in sales tax.
September 28, 2013, 12:05 am TWN
In Tokyo afternoon trade, the dollar bought 98.62 yen, compared with 98.94 yen late in New York and well below the levels above 99 yen in Asia Thursday.
The euro slipped to 133.03 yen from 133.48 yen, while holding steady at US$1.3489 from US$1.3488.
On Thursday Japan's Kyodo news agency said Tokyo would “urgently consider” a corporate tax cut to allay fears that the flagged rise in the sales levy — to 8.0 percent from 5.0 percent — would hurt the country's economic revival.
That boosted confidence among traders, who moved out of the safe-haven yen.
But on Friday dealers moved back into the Japanese unit after Finance Minister Taro Aso threw into question a timeline for any business tax cuts, which he described as a “long-term issue”.
The dollar received a measure of support in New York from data showing an unexpected improvement in weekly figures for U.S. initial claims for unemployment insurance.
However, investors are on edge over a budget stand-off on Capitol Hill that, if not resolved by midnight Monday, could see some parts of the federal government shut down.
Data released Friday showing Japanese inflation hit a five-year high last month had little impact on currency markets, dealers said.
The dollar was mixed against other Asia-Pacific currencies.
It firmed to SG$1.2553 from SG$1.2541 on Thursday and to 31.22 Thai baht from 31.16 baht.
The greenback weakened to 43.28 Philippine pesos from 43.31 pesos, to 1,073.85 South Korean won from 1,074.27 won, to 11,264 Indonesia rupiah from 11,470 rupiah and to 61.85 Indian rupees from 62.20 rupees.
The Australian dollar slipped to 93.55 U.S. cents from 93.96 cents. The Chinese yuan changed hands at 16.08 yen against 16.16 yen.