BLBG:Yen Gains for 2nd Day Before G-20 Meets; Aussie Climbs
The yen strengthened for a second day against the dollar before a Group-of-20 meeting this weekend at which officials may criticize the currency’s recent declines.
Japan’s currency advanced against most of its 16 major counterparts after the Group of Seven issued a statement yesterday calling for market-determined exchange rates, while an official said the G-7 was concerned about excess moves in the yen. Sweden’s krona rallied after the central bank kept interest rates unchanged. The Australian dollar rose for a second day as an industry report showed consumer confidence increased.
“The market is cautious that there may be further criticism from major countries at the upcoming meeting about Japan’s monetary policy and the recent yen depreciation,” said Neil Jones, head of European Hedge Fund Sales at Mizuho Corporate Bank Ltd. in London. “Some people may be buying the yen to cover short positions after the G-7 statement yesterday.” A short position is a bet an asset will fall.
The yen appreciated 0.2 percent to 93.31 per dollar as of 10:21 a.m. in London after gaining 0.9 percent yesterday. Japan’s currency rose 0.1 percent to 125.66 per euro after depreciating to 127.71 on Feb. 6, the weakest since April 2010. The euro advanced 0.1 percent to $1.3461.
Japan’s currency has tumbled 18 percent in the past three months, the worst performer among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar declined 1.7 percent and the euro rose 4.9 percent.
G-7 Statement
G-7 finance ministers and central-bank governors released a statement yesterday that appeared to signal acceptance for a weaker yen, so long as Japanese Prime Minister Shinzo Abe’s government doesn’t actively pursue devaluation.
This position was then challenged when an unidentified official from a G-7 nation issued a clarification saying the group was concerned about excessive moves in the yen and Japan’s practice of giving guidance on its value.
Finance ministers and central bankers from the G-20, which includes the G-7 and emerging markets such as Brazil, China and India, meet in Moscow on Feb. 15-16.
The Bank of Japan announces its monetary-policy decision tomorrow following a two-day meeting. Governor Masaaki Shirakawa said last week he will step down with two of his deputies on March 19, about three weeks before his term is due to end.
Krona Jumps
Sweden’s krona rose to a four-month high against the euro after the Riksbank left its benchmark interest rate on hold amid optimism the region’s debt crisis is easing.
“Growth in the Swedish economy is still weak and inflationary pressures are low,” the central bank said. “But there are some positive signs pointing towards stabilization and strengthening in economic activity over the year.”
The seven-day repo rate was kept at 1 percent, the Stockholm-based bank said. The decision was predicted by 13 of 22 economist surveyed by Bloomberg News, with the rest forecasting a cut.
The krona rose 0.8 percent to 8.5001 per euro after appreciating to 8.4939, the strongest level since Oct. 2.
The so-called Aussie rose after Westpac Banking Corp. and Melbourne Institute said their consumer confidence index for February climbed to a two-year high, damping speculation the Reserve Bank of Australia will cut interest rates.
“The odds of a RBA rate cut in March have now slipped a little bit” after the release of the consumer-confidence survey, said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “The near-term risks are that it can head higher,” he said, referring to the Australian dollar.
The Aussie rallied 0.4 percent to $1.0341 after appreciating 0.5 percent yesterday.
To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
