Dollar weakens versus yen after Bank of Japan’s policy tweak

23 Dec 2015 | Author: | No comments yet »

Dollar weakens against yen.

NEW YORK — Stocks plunged across all sectors in the heaviest trading of the year Friday as enthusiasm over a long-awaited increase in U.S. interest rates faded.The Japanese central bank jolted markets with a new scheme supporting companies actively investing in the world’s number three economy, stoking a brief surge in the Nikkei benchmark stock index and the dollar. The greenback traded lower at 121.79 yen late Friday afternoon from 122.56 yen before the declaration in Tokyo, and from 122.60 yen Thursday in New York. “At first it seemed like the BoJ was progressing with easing, but when you look at what’s inside that, it’s nothing much,” Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd, told Bloomberg News.

Dealers had held on to the dollar in the wake of the Fed’s long-awaited decision on Wednesday to raise interest rates for the first time in nearly a decade, as the US central bank signaled confidence in the health of the world’s top economy. Another drop in energy prices sent oil stocks lower again, and worries about weak global growth weighed on shipping and other transportation companies. U.S. stock trading was even more volatile than usual Friday because of the simultaneous expiration of several kinds of futures and other contracts that investors use to place bets on indexes and individual stocks.

But over the next two days stocks were hit by some of the worries that have dogged them all year, like weakness in the Chinese economy, slowing global growth, and skidding prices for energy and metals. While the Bank of Japan plans to spend a bit more on exchange-traded funds for companies that increase hiring and investment, investors were hoping for more, according to Ryan Larson, head of U.S. equity trading for RBC Global Asset Management. The global market went into a similar slide two weeks ago, when the European Central Bank ramped up its stimulus efforts but didn’t do nearly as much as expected. Transocean gave up 74 cents, or 5.7 percent, to $12.26 while Ensco lost $1.08, or 7 percent, to $14.31 and Diamond Offshore Drilling dipped 70 cents, or 3.3 percent, to$20.47. The dollar had climbed Thursday and is expected to gain strength as the Fed raises interest rates while central banks in Europe and Japan reduce interest rates.

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