Investing.com - The U.S. dollar fell sharply against the Japanese yen in U.S. trade Friday, sinking to an all-time post-war low, as market eyes turned to Europe and a meeting of finance officials for hopes of a quick resolution to the euro-zone’s debt problems.
In early U.S. trade USD/JPY hit 75.82, the pair’s lowest since August 19, the previous record low; the pair subsequently consolidated at 76.18, falling 0.81%.
The pair was likely to find support at 75.82, the all-time low, and resistance at 77.27, Monday’s high.
The yen’s jump, after a period of relative stability raised the specter of another market intervention from the Bank of Japan to weaken the local currency, as export firms in Japan suffer when repatriating overseas profits.
Bank of Japan Governor Masaaki Shirakawa said Friday that tensions caused by Europe’s debt crisis appeared to be easing but that the central bank was closely monitoring risks to the market.
On Friday, the Japanese Cabinet Office announced additional subsidies of USD26 billion in an attempt to retain Japanese companies and discourage relocation to overseas production sites.
Meanwhile, finance ministers from the euro-zone’s 17 nations convened in Brussels Friday to discuss boosting the current USD607 billion European Financial Stability Facility, but a rift remained between Germany and France on how best to maximize the fund’s impact.
France has pushed for the use of additional money to come from the European Central Bank, while Germany argued that such a move would violate an EU treaty prohibiting the financing of governments.
“We will stick to the situation as it is in the treaty, that the central bank is not available for state financing,” German Finance Minister Wolfgang Schaeuble said before Friday’s meeting.
Last week officials from both countries set Sunday as a deadline for formulating a plan, but announced adding a second meeting next Wednesday to formally outline details of an agreement.
Meanwhile, the yen moved higher against both euro but down against the British pound with EUR/JPY down 0.37% to hit 105.42, and GBP/JPY rising 0.03% to hit 121.30.
Finance Ministers from all 27 European countries were set to join euro-zone ministers in Brussels on Saturday, followed by the additional summit on October 26.