NEW YORK ( TheStreet) -- The Japanese yen has sunk to a six-month low against the U.S. dollar on speculation that Japan's central bank will take longer than other countries to raise interest rates.
The U.S. dollar was rising 0.4% against the Japanese currency at 85.181 yen. On Wednesday, the U.S. currency hit a six-month high against the Japanese currency at 85.515 yen.
The Bank of Japan is expected to announce that it has maintained its target rate at zero to 0.1% at the end of its two-day meeting on Thursday, according to a
survey of economists, as the country tries to get back on its feet again after being struck by a massive earthquake and tsunami on March 11.
The Bank of Japan is thinking of introducing a credit program that would encourage banks to lend to companies facing cash-flow shortages following the earthquake, according to
"The selling of Japanese yen continues, folks," said EverBank World Markets President Chuck Butler. "The yen has lost 3.3% in the past month, and I just don't see this being a short-term move."
Canada's Department of Finance said it sold $124 million of Japanese yen during the G7 group of industrialized nations' coordinated maneuver to stem the yen's appreciation last month.
Marc Ostwald of Monument Securities said the long-term technical supports of the yen are being threatened.
The dollar was falling 0.5% against the euro at EUR 0.69936, with the European Central Bank widely expected to raise its key interest rate by 25 basis points to 1.25% at its Thursday meeting; the move would widen the interest rate differentials between the U.S. and Europe.
"The euro has been well-supported in recent weeks, despite renewed concerns about the periphery and the notion that a more hawkish monetary policy stance by the ECB will weigh on weaker Eurozone member states," said UBS foreign exchange strategist Manuel Oliveri.
PowerShares DB US Dollar Index Bullish
was falling 0.4% to $21.69 in premarket trading, while
CurrencyShares Euro Trust
was rising 0.5% to $142.44.
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-- Written by Andrea Tse in New York.
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