The yen declined for a second day against all its major counterparts on speculation the Group of Seven nations will keep selling the currency to curb its appreciation and help support Japan’s economy. The yen extended losses after sliding the most against the dollar in six months on March 18 when G-7 members intervened after Japan’s currency surged to a postwar high, endangering the nation’s recovery from its biggest ever earthquake. The Australian and New Zealand dollars strengthened as Asian stocks rose and Japan made progress in bringing a damaged nuclear power plant under control, boosting demand for higher-yielding assets. “Joint or solo intervention is still possible in the currency markets,” said Marito Ueda, senior managing director at FX Prime Corp., a foreign-exchange margin company in Tokyo. “This may help to halt risk aversion, which could be positive for equities and negative for the yen.” Japan’s currency fell to 80.91 per dollar as of 12:43 p.m. in Tokyo from 80.58 in New York on March 18, when it declined 2.1 percent. The yen dropped 0.3 percent to 114.66 per euro. The euro traded at $1.4172 from $1.4182, after earlier rising to $1.4199, the strongest since Nov. 5. Financial markets in Japan are shut today for a holiday. Postwar High The yen surged to a post-World-War II high of 76.25 versus the dollar on March 17 after a 9.0-magnitude earthquake and tsunami struck Japan on March 11. The currency’s gain came amid speculation investors were repatriating assets to fund the estimated 10 trillion yen ($123.6 billion) needed to finance reconstruction. The G-7, which comprises the U.S., Japan, Germany, the U.K., France, Canada and Italy, sold yen on March 18 after their finance chiefs spoke on a conference call, Japan’s Vice Finance Minister Fumihiko Igarashi said in an interview. They made their decision in a statement that promised to “provide any cooperation” with Japan. Wells Fargo & Co. and Bank of Tokyo-Mitsubishi UFJ Ltd. say the yen’s gains will reverse as Bank of Japan Governor Masaaki Shirakawa injects cash into the financial system just as his peers prepare to tighten monetary policy. “The yen will weaken over time,” said Nick Bennenbroek, head of currency strategy at Wells Fargo, the second most- accurate predictor of Japan’s currency against the euro in the six quarters through December, according to data compiled by Bloomberg. “The policy response from the authorities is going to be quite substantial. We have already seen action from Japan and other G-7 countries. We would expect further intervention, at least from Japan.” Futures Bets Futures traders added to bets the yen will gain against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on an advance in the yen compared with those on a drop -- so-called net longs -- was 30,230 on March 15, compared with 16,656 a week earlier. Futures positions, when they reach an extreme, are sometimes viewed as a contrarian indicator because traders often seek to cut positions when momentum in a currency shifts. The Australian and New Zealand dollars strengthened for a second day versus the yen as higher oil prices increased demand for currencies linked to commodities. ‘Bullish Bias’ “There’s a slight bullish bias this week,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “High global commodity prices are a big boon for the kiwi and Aussie.” Australia’s currency advanced 0.5 percent to $1.0007, and gained 0.9 percent to 80.97 yen. New Zealand’s dollar rose 0.3 percent to 73.32 U.S. cents and appreciated 0.9 percent to 59.34 yen. The MSCI Asia Pacific Index of shares gained 0.7 percent, after rising 0.4 percent on March 18. Temperatures at all six spent fuel storage pools at the Fukushima Dai-Ichi nuclear complex are below the boiling point, indicating that dousing efforts by Japanese engineers to cool the used fuel rods at the reactors may be working. Losses in the dollar were tempered after the U.S., U.K. and France launched cruise missiles and airstrikes at targets in Libya and as persisting unrest in the region renewed concerns the turmoil will spread in the Middle East. A no-fly zone is now in place over Libya, Admiral Mike Mullen, chairman of the U.S. Joint Chiefs of Staff, said yesterday. The coalition ordered Libyan leader Muammar Qaddafi to withdraw his forces from major cities after weeks of fighting with rebels that has left hundreds dead in the bloodiest of popular uprisings to have swept the Middle East and North Africa this year. “Geopolitical risk in the Middle East and Libya are still a worry,” said Norifumi Yoshida, vice president of the trading section in Singapore at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest banking group. “We may see buying of safe-haven currencies.” The dollar typically strengthens in times of political, financial and economic turmoil as it’s the world’s principal reserve currency. To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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