LONDON: The yen briefly hit a seven-year low against the dollar in volatile trade on Monday after global rating agency Moody’s cut Japan’s sovereign rating, underlining its fiscal problems.

The dollar rose as high as 119.15 yen on the EBS trading platform, its highest since July 2007, immediately after the rating decision was announced. It ran into profit-taking and was last trading at 118.48 yen, down 0.1 per cent on the day.

Japanese stock futures eased after the downgrade, helping the yen to recover, traders said.

Moody’s cut Japan’s rating to A1 from AA3 and assigned a stable outlook to its debt.

The downgrade came less than two weeks before the Japanese prime minister seeks re-election in a snap poll where his stimulus policies and a decision to delay a second sales tax hike will be key issues.

Published in Dawn December 2nd , 2014