Dollar Edges Lower Against Stronger Yen

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Japanease 10000 yen and 100 Dollar .

The dollar fell against the yen on Wednesday after a frantic selloff of Chinese shares caused investors to scamper for safe haven assets, reviving concerns over a global economic slowdown.

USD/JPY fell to new lows of 112.23, the biggest drop since March 1st.

The yen gained broad support after reports said the Bank of Japan (BoJ) may decide against cutting interest rates during their monetary policy review meeting next week. Some analysts view the BoJ’s loose monetary policy measures as ineffective, or is providing diminishing returns at best.

The Japanese currency has climbed to its highest level against the U.S. dollar in over a year amid falling oil prices and plummeting stocks since the beginning of the year.

A weaker yen has been an important component of Shinzo Abe’s economic program, that helped prop up exports.

In a separate development, Prime Minister Abe hinted on Wednesday that the government may postpone the planned sales tax increase slated in April given the status of the country’s economy.

The Japanese economy contracted 1.1% in the closing of 2015. Analysts are also expecting modest recovery in the first quarter this year.

In 2014, a hike in sales tax pushed the country’s economy into recession.

The yen also strengthened against the euro, causing the EUR/JPY to drop 0.65% at 123.19.

The euro was also lower against the dollar, with EUR/USD falling 0.42% to trade lower at 1.0963.

The U.S. dollar index, which tracks the greenback’s performance against six rival currencies, was up 0.26% to 97.41, thanks to the weak euro.

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