|The yen fell from a six-week high
against the euro as stocks rose and a Japanese government
official fanned speculation the central bank may seek to weaken
the currency after it gained 4 percent in five days.
The yen also retreated from a four-month high against the
dollar as the MSCI World Index snapped a five-day decline and
Reuters cited Chief Cabinet Secretary Takeo Kawamura as saying
excessive currency movements are undesirable. The pound rose by
the most in almost three weeks against the dollar after the Bank
of England said it will keep its bond-buying program unchanged.
Indonesia’s rupiah rose as exit polls pointed to a landslide
victory for President Susilo Bambang Yudhoyono.
“Japanese officials are concerned about the speed of the
yen appreciation,” said Neil Jones, head of European hedge-fund
sales at Mizuho Corporate Bank Ltd. in London. “If it goes too
much too quickly, there is a danger of intervention.”
The yen weakened to 129.69 per euro as of 7:30 a.m. in New
York, from 128.95 yesterday, when it strengthened to 127.02, the
strongest level since May 18. It was at 92.91 per dollar, from
92.88 yesterday, when it reached 91.81, the highest level since
Feb. 17. The euro advanced to $1.3955, from $1.3884.
The yen strengthened as much as 3.9 percent versus the euro
yesterday, the most since October, and 3.3 percent against the
dollar as concern that the recovery from the global recession
will be delayed prompted investors to seek refuge in the
currency. The yen typically rises during times of financial
turmoil because Japan’s trade surplus reduces the nation’s
reliance on overseas lenders.
The yen may strengthen to trade below 125 per euro and 90
against the dollar through August, and then decline by year-end,
The dollar’s 14-day stochastic oscillator against the yen
was at 19.9 yesterday, below the 20 level that signals it may
have fallen too quickly and is poised to rise. In technical
analysis, investors and analysts study charts of trading
patterns and prices to forecast changes in a currency.
“The yen’s surge was very fast, so a correction of this is
under way,” said Nobuaki Kubo, vice president of foreign
exchange in Tokyo at BBH Investment Services Inc., a unit of New
York-based Brown Brothers Harriman & Co.
Japan’s government is closely watching market moves,
Kawamura said at a news conference today, according to Reuters.
The MSCI World Index rose 0.4 percent and every stock
market in Europe advanced after China said passenger-vehicle
sales rose 48 percent in June, the biggest jump since February
2006, and Alcoa Inc. kicked off the second-quarter earnings
season by reporting results that beat analysts’ estimates.
Standard & Poor’s 500 Index futures climbed 0.7 percent.
“Corporate earnings can surprise on the upside and that
will take the shine off the yen and support stock markets,”
The world economy will expand 2.5 percent in 2010, the
International Monetary Fund said yesterday, revising its
forecast from an April projection of 1.9 percent growth.
The pound climbed as much as 1.2 percent, the most since
June 19, after the Bank of England said it will keep its asset-
purchase plan at 125 billion pounds. The British currency traded
as high as $1.6266, from $1.6072 yesterday. It strengthened to
85.96 pence per euro, from 86.39 pence. The British Chambers of
Commerce recommended two days ago that policymakers expand the
program to revive the economy.
“There was always a risk sterling would get a spike if
they didn’t do anything and that’s what we’ve got,” said Jeremy
Stretch, a senior strategist at Rabobank International in
London. “Sterling might get a short-term boost, but I wouldn’t
want to overplay it.”
Investors bought higher-yielding currencies as China’s
passenger-vehicle sales data added to evidence government
stimulus spending is spurring a revival in the world’s third-
largest economy. China is “a positive force” that will help
drive growth, billionaire investor George Soros said yesterday.
The recovery in Asian markets “suggests that Japanese
importers are selling the yen” to take advantage of yesterday’s
gains, analysts led by Ulrich Leuchtmann, head of foreign-
exchange research in Frankfurt at Commerzbank AG, wrote in a
report today. “We still consider it unlikely that yesterday’s
appreciation constitutes a sustainable” advance for Japan’s
Indonesia’s rupiah rose as President Yudhoyono swept toward
a second five-year term, paving the way for more pro-growth
policies. Yudhoyono led rivals with 61 percent of votes,
according to a preliminary count by the Indonesia Survey
Institute. The $433 billion economy may expand as much as 4
percent this year, the fastest pace in Asia after India and
China, the IMF estimates.
“It was the best-case scenario,” said Tim Condon,
Singapore-based head of Asia research at ING Groep NV. “The
rupiah will rally to 10,000 to the dollar. I see any dollar
strength right now from global risk aversion as a chance to sell
dollars and buy rupiah.”
The rupiah rose 1.4 percent to 10,148 per dollar, extending
its gains to 11.6 percent in the past three months.
South Korea’s won declined for a fourth day against the
dollar after the central bank left its benchmark rate unchanged
today at a record low.
The Bank of Korea held the seven-day repurchase rate at 2
percent, as expected by all economists surveyed by Bloomberg
News. The bank slashed rates by 3.25 percentage points between
October and February, the steepest cuts since it began setting a
policy rate a decade ago.
The won traded 0.2 percent lower at 1,278.95 per dollar,
after declining to 1,282.25, the weakest since June 30.
Group of Eight
The yen strengthened earlier after Group of Eight leaders
said yesterday the global economic recovery is too fragile to
withdraw stimulus efforts, bolstering demand for the currency as
a refuge from the slump.
U.S. President Barack Obama called for the door to remain
open to more stimulus measures as a renewed stock-market drop
stirred concern that $2 trillion spent worldwide so far hasn’t
jolted consumers and businesses back to life.
Leaders from the G-8 and those from the Group of Five
developing nations agreed to “refrain from competitive
devaluations of our currencies,” according to a draft of a
statement to be released in L’Aquila, Italy. They will “promote
a stable and well-functioning international monetary system.”
To contact the reporters on this story:
Lukanyo Mnyanda in London at
Ron Harui in Singapore at