Yen extends slide, oil rises tracking central banks…

Yen extends slide, oil rises tracking central banks and Putin

Oil prices have been hammered by demand fears as traders grow increasingly worried about a possible recession. ©AFP

London (AFP) - The yen slumped to a 24-year low against the dollar and shed more than one percent versus the euro Wednesday as Japan refuses to hike interest rates to combat sky-high inflation.

The European Central Bank is Thursday forecast to deliver another bumper rate increase, mirroring aggressive moves by the US Federal Reserve and Bank of England.

Elsewhere Wednesday, oil prices climbed as Russia's President Vladimir Putin said his country would stop delivering oil and gas supplies to countries that introduce price caps.

G7 industrialised powers have vowed to move urgently towards implementing a price cap on Russian oil imports to cut off a major source of funding for Moscow's military action in Ukraine.

In stock market trading, European and Asian indices mostly retreated but Shanghai closed slightly up.

On foreign exchange markets, one dollar was worth 144.38 yen -- the Japanese currency's weakest showing since 1998.

"The reason that we are seeing this much strength in the dollar against the yen is purely because of the difference in two central banks' policies," noted Naeem Aslam, chief market analyst at AvaTrade.

"The Fed is as hawkish as it can be, and the BoJ still doesn't seem to be bothered much about inflation or changing its stance on monetary policy."

Japan's finance minister, Shunichi Suzuki, on Wednesday expressed concern about the yen's drop.

"For now, we're monitoring with a sense of urgency how it's developing, but if this continues, it makes sense that we will take necessary measures," he added.

The dollar continues to gain strength from expectations of a third-straight blockbuster hike to US interest rates next month.

Several top Fed officials -- including head Jerome Powell -- have lined up in recent weeks to say their main focus is bringing inflation down from four-decade highs, even if that means tipping the economy into recession.

The euro remained lodged below parity with the dollar, despite the European Central Bank preparing to further ramp up rates.

And the greenback was also pushing towards a 37-year peak against sterling, which saw a brief rally Tuesday on reports new UK Prime Minister Liz Truss was planning a £130 billion ($150 billion) package to freeze a looming surge in household energy costs.