BLBG: Dollar Rises Most Against Yen in More Than Week on Retail Gain
By Ben Levisohn
April 14 (Bloomberg) -- The dollar increased the most versus the yen in more than a week as a report showed U.S. retail sales climbed in March more than economists forecast.
The yen fell against all of its most-active counterparts as evidence the global recovery is gaining momentum spurred demand for higher-yielding assets. Singapore’s dollar climbed to the strongest level versus the greenback since August 2008 after the Monetary Authority unexpectedly revalued its currency in the latest sign that China may let its yuan strengthen.
“People are selling the yen and starting to buy other higher-yielding assets as world economic data comes in better than expected,” said John Doyle, a strategist at currency- trading firm Tempus Consulting Inc. in Washington.
The dollar advanced as much as 0.6 percent to 93.72 yen in the biggest intraday gain since April 2 before trading at 93.39 yen at 9:01 a.m. in New York, compared with 93.20 yesterday. Japan’s currency slid 0.4 percent to 127.37 per euro, from 126.88. The dollar advanced 0.2 percent to $1.3640 per euro, from $1.3614.
Federal Reserve Bank of Richmond President Jeffrey Lacker said yesterday the central bank may amend “sooner rather than later” its pledge to keep interest rates at a record low. Chairman Ben S. Bernanke testifies before Congress’s Joint Economic Committee today.
The Labor Department’s report of 162,000 jobs added to payrolls in March was the “most encouraging sign” yet of a recovery, and the “risk of a pronounced decline in inflation has diminished substantially,” Lacker said yesterday in a speech in Morgantown, West Virginia.
Retail Gain
U.S. retail sales increased 1.6 percent in March after a revised 0.5 percent advance in the previous month, the Commerce Department reported today. The median forecast of 79 economists in a Bloomberg News survey was for a 1.2 percent increase.
“There is growing confidence that the global economic recovery may prove more sustainable than previously thought,” said Lee Hardman, a London-based currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd., before the report. “That definitely weighs on the yen.”
A 0.1 percent gain in the consumer price index was in line with expectations and followed no change in February, the Labor Department reported today. Excluding food and fuel, the core rate held steady after rising 0.1 percent in February.
Australia’s dollar advanced 0.7 percent to 87.24 yen and Brazil’s real appreciated 0.8 percent to 53.56 yen on speculation signs of a global economic recovery will encourage investors to increase carry trades, in which they buy higher- yielding assets with amounts borrowed in nations with low interest rates. The target lending rate of 0.1 percent in Japan has made the yen popular for funding such transactions.
U.S. Stocks
Standard & Poor’s 500 Index futures expiring in June advanced 0.4 percent.
Singapore’s dollar climbed as much as 1.3 percent to S$1.3741, the strongest level since August 2008, after the Monetary Authority said it will seek a “modest and gradual appreciation” in the currency.
The decision adds to signs that China, which will probably report its quickest expansion in three years tomorrow, is preparing to end the yuan’s 21-month-old peg to the dollar.
“Singapore doesn’t want to be behind the curve as other central banks tighten monetary policy,” said Alvin Liew, an economist at Standard Chartered Plc in Singapore. “The central bank is concerned about domestic and imported inflation as the global economy strengthens.”
Singapore’s Growth
The trade ministry said the $182 billion economy will expand as much as 9 percent in 2010, compared with a previous outlook of 6.5 percent, after the fastest growth since at least 1975 in the first quarter.
South Korea’s won gained after a report showed the nation’s jobless rate sank the most in 10 years. The won rose 1.1 percent to 1,112.15 per dollar.
Unemployment fell to 3.8 percent in March from 4.4 percent in the previous month, Statistics Korea said today, citing seasonally adjusted figures. Joblessness hit a 10-year high of 4.8 percent in January. South Korea’s government bond ratings were upgraded to A1 from A2 at Moody’s Investors Service today.
The yen also dropped on increased demand for risk after Bank of Japan Governor Masaaki Shirakawa said concern a double- dip recession will occur has diminished.
To contact the reporter on this story: Ben Levisohn in New York at blevisohn@bloomberg.net
