BLBG:Yen Falls Versus Major Peers As IMF Comments On Strength
The euro rose against the dollar and the yen, snapping a drop from yesterday, before European Central Bank policy makers meet for the first time since President Mario Draghi pledged to do whatever is needed to protect the currency.
The yen weakened against most of its major counterparts after the International Monetary Fund said it’s “moderately overvalued,” easing the way for Japan to try to weaken the currency to aid exporters. The greenback was little changed versus the yen after the Federal Reserve yesterday refrained from monetary easing. The Swedish krona and the Norwegian krone advanced, while the South Korean won tumbled.
“Many investors are expecting something” after Draghi’s comments last week, said Chris Walker, a currency strategist at UBS AG (UBSN) in London. “There is scope for disappointment if he says something similar to last week today but does not follow up on it. Expectations are maybe too high.”
The euro advanced 0.4 percent to $1.2275 at 9:35 a.m. London time after dropping 0.6 percent yesterday. The shared currency gained 0.4 percent to 96.28 yen. The dollar was little changed at 78.44 yen.
ECB officials meeting in Frankfurt will keep the benchmark interest rate at a record low 0.75 percent, according to 51 of 55 economists in a Bloomberg News survey. Four predict a cut to 0.5 percent. The deposit rate will be left at zero, another survey shows.
‘Shock-and-Awe’
Draghi will hold a press conference at 2:30 p.m. to explain the decision. Any new measures will also be announced then.
“I think a lot of people are expecting the ECB to announce some sort of ‘shock-and-awe’ policy today,” said Peter Dragicevich, a Sydney-based foreign-exchange economist at Commonwealth Bank of Australia. “If the ECB were to disappoint, we expect the euro to fall.”
The yen declined against 14 of its 16 major counterparts after IMF staff wrote in their Financial System Stability Assessment report released yesterday that while the Japanese government should let markets determine exchange rates, interventions could be used to smooth volatility and disorderly moves. Finance Minister Jun Azumi, who has said he won’t rule out any options to combat the currency’s appreciation, said today the IMF shares the government’s view on the yen.
The Swedish krona strengthened 0.6 percent to 6.7654 per dollar, while Norway’s krone added 0.5 percent against the greenback to 6.0145. The South Korean won fell 0.5 percent to 1131.70 per dollar.
-- With assistance from Hiroko Komiya, Monami Yui and Mariko Ishikawa in Tokyo and Kristine Aquino in Singapore. Editors: Mark McCord, Nicholas Reynolds
To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net; Eleanor Lawrie in London at elawrie@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
