Dollar, yen swing amidst yuan debate

The dollar see-sawed sharply against the yen on Friday as the market struggled to digest comments by a Chinese official that the time was ripe for China to move gradually toward a more flexible exchange rate regime.

The dollar hit a nine-day low against the yen immediately after the comments by Yu Yongding, an economist at the Chinese Academy of Social Science, who was speaking at a currency seminar at WEF in Davos. It later recouped those losses and shot up a quarter of a yen after a report by Dow Jones quoted a Chinese central bank official as saying the comments were not an official government view. ‘‘With every small piece of information, whether spurious or not, we’re getting more and more speculation about Chinese policy,’’ said Naomi Fink, senior currency analyst at BNP Paribas.

Fink said currencies would likely remain volatile ahead of a meeting of G-7 economic powers next week, which China is attending and where currency flexibility is expected to be a hot topic for debate. The market has been awash with speculation that China may soon move to relax the peg of its yuan to the dollar. —Reuters