Yen Falls After BoJ's Uchida Says No Rate Hikes If Markets Are Volatile

The Japanese yen weakened against other major currencies in the Asian session on Wednesday, after Bank of Japan Deputy Governor Shinichi Uchida said that the central bank won't raise the benchmark interest rate if financial markets are unstable.

Speaking to business leaders in the northern Japanese city of Hakodate, the BoJ Uchida said the market moves are intensely volatile in the past week and could "obviously" change the BOJ's rate hike path if it affects the central bank's economic and price projections and the likelihood of Japan durably achieving its 2% inflation target.

"As we're seeing sharp volatility in domestic and overseas financial markets, it's necessary to maintain current levels of monetary easing for the time being," Uchida said.

"We won't raise interest rates when financial markets are unstable," he said.

The BOJ raised its interest rate last week and the U.S. Federal Reserve signaled rate cuts in September.

The Asian stock markets traded higher today, as investors across most markets are picking up stocks at a bargain after the recent strong sell-off amid fears about the world's largest economy slipping into recession.

In the Asian trading today, the yen fell to a 6-day low of 172.18 against the Swiss franc and a 2-day low of 188.07 against the pound, from yesterday's closing quotes of 169.43 and 183.13, respectively. If the yen extends its downtrend, it is likely to find support around 177.00 against the franc and 196.00 against the pound.

Against the euro and the U.S. dollar, the yen dropped to 5-day lows of 161.44 and 147.90 from Tuesday's closing quotes of 157.72 and 144.30, respectively. The yen may test support near 169.00 against the euro and 156.00 against the greenback.

Looking ahead, Canada Ivey PMI for July, U.S. MBA weekly mortgage approvals data, used car prices data for July, consumer credit change for July and U.S. EIA crude oil data are slated for release in the New York session.