BLBG: Yen Weakens on Speculation Japan’s Business Confidence Slumped
The yen fell against the euro, heading for its biggest quarterly loss since June, on speculation a central bank report tomorrow will show business confidence in Japan slumped to a 30-year low
The euro gained the most in a week versus the yen on optimism a European Central Bank policy maker speaking today will signal the bank will refrain from cutting interest rates further after lowering them next month. The yen also weakened against the dollar, adding to its worst quarter since 2001, after a government report showed Japan’s jobless rate jumped to a three-year high.
“If the Tankan is worse than expected, then it’ll be very yen negative as market participants won’t regard the yen as a safe haven any more,” said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital, a unit of the U.K.’s third-biggest bank.
The yen dropped to 129.87 per euro as of 1:34 p.m. in Tokyo from 128.36 in New York yesterday, when it touched 126.42, the strongest level since March 16. Japan’s currency fell to 98.10 per dollar from 97.26. The dollar traded at $1.3240 per euro from $1.3199.
Japan’s currency’s has tumbled 7.6 percent against the greenback this quarter, the worst performance since the last three months of 2001, and has weakened 2.5 percent per euro.
Confidence among Japan’s large manufacturers slid to minus 55 in March from minus 24 in December, according to a Bloomberg News survey of economists. That would be the lowest since 1975. The nation’s jobless rate climbed to a three-year high of 4.4 percent in February, from 4.1 percent the previous month, a statistics bureau report showed today.
ECB Rates
The euro rose for the first time in three days against the yen on speculation assets denominated in Europe’s currency will maintain their advantage over those in Japan even if the ECB cuts rates at this week’s meeting.
ECB President Jean-Claude Trichet and his colleagues will lower borrowing costs to 1 percent from 1.5 percent on April 2, according to a Bloomberg survey. ECB council member Axel Weber this month said the central bank shouldn’t cut borrowing costs below one percent. Governing Council member Miguel Angel Fernandez Ordonez speaks at 10 a.m. today in Madrid.
“The ECB will continue to be reluctant to cut rates or to move to quantitative easing in the near future,” said Satoru Ogasawara, a foreign-exchange analyst and economist in Tokyo at Credit Suisse Group AG, the second-largest Swiss bank. “The monetary-policy differentials make the euro more supported.”
