The yen may reverse this year’s drop against the U.S. dollar and the British pound as Japan’s currency takes over from the greenback as the best refuge from the global financial crisis, TD Securities said. Investors may benefit by adding to bets against the dollar, with the U.S. currency expected to reach 92 yen by year-end, wrote analysts led by Stephen Koukoulas, head of global foreign exchange and fixed income at TD Securities in London. TD also recommended selling the pound against the yen, targeting a slide in the British currency to 139 yen. “The U.S. dollar’s cozy relationship with risk aversion is at risk itself,” the analysts wrote. The yen “has a chance at establishing its credentials as the refuge of choice in time of market uncertainty.” The yen is this year’s worst-performer of the 16 most- traded currencies tracked by Bloomberg, as optimism that the global recession will abate encouraged investors to seek higher- yielding assets. The Bank of Japan cut its benchmark interest rate to 0.1 percent in December. The U.S. dollar ended three days of losses, rising 0.3 percent to 95.55 yen as of 10:17 a.m. in Tokyo and the pound traded at 144.69 yen. Japan’s currency weakened 5.1 percent against the dollar and 8.5 percent versus sterling this year. Japan’s current-account surplus narrowed at the slowest pace in six months in March as a decline in exports eased, the Ministry of Finance said yesterday. The surplus shrank to 1.486 trillion yen ($15.5 billion) from a year earlier, compared to economists’ median estimate for it to narrow to 1.21 trillion yen. On a seasonally adjusted basis, the current-account surplus widened 31.7 percent from February, the report showed. TD Securities raised its forecast for the yen, citing the “stabilization” in Japan’s external accounts, high domestic savings and investors’ “professed home bias.” The currency may trade at 90 yen against the greenback by the end of March 2010, the analysts said.

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