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Yen Remains Unbowed
World Economy

Yen Remains Unbowed

As China’s devaluation of the yuan drags the currencies of its neighbors to new multi-year lows, the yen has been steadfast amid speculation the Bank of Japan doesn’t want it to weaken much further.
Japan’s currency has fallen 0.5% since the Chinese central bank’s move Tuesday, stalling near a 13-year low set on June 5. That compares with a 2.1% plunge in Australia’s currency to the lowest in six years, and a 1.4% slide in Taiwan’s dollar to levels unseen since July 2010, Bloomberg reported.
The yen’s drop halted at 125.28 per dollar Wednesday, stopping within the 124.50-to-125.50 range that some traders in Tokyo have dubbed the Kuroda line. The currency had rallied for about a month since weakening to 125.86 on June 5, after Bank of Japan Governor Haruhiko Kuroda said he couldn’t see it depreciating much more when adjusted for inflation and trade.
The yen may be insulated from losses because Japan is a net importer of Chinese goods, analysts including Trinh said. Australia exports more to China than it imports.
Japan’s currency was at 125.15 per dollar in Tokyo Wednesday from 125.13 in New York. As China’s devaluation of the yuan drags the currencies of its neighbors to new multi-year lows, the yen has been steadfast amid speculation the Bank of Japan doesn’t want it to weaken much further. Meanwhile, regional currencies suffered a second day of heavy losses on Wednesday as the People's Bank of China set its daily midpoint reference rate even weaker than Tuesday's devaluation, rekindling concerns around the health of the world's second largest economy.
The Indonesian rupiah led the declines, falling 1.7% against the US dollar to its lowest level since July 1998, while the Malaysian ringgit slid 1.4% to its weakest since September 1998. The Singapore dollar, Taiwan dollar and Philippine peso, meanwhile, all touched five-year lows.

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