BLBG:Yen Strengthens Amid BOJ Speculation Before G-20; Kiwi Climbs
The yen climbed ahead of a meeting of Group-of-20 finance officials and as investors speculated who may be chosen to lead the Bank of Japan to carry out Prime Minister Shinzo Abe’s push for more monetary stimulus.
Toshiro Muto is the leading candidate for BOJ governor, Reuters reported today, citing people close to the selection process. Muto is the most conservative among probable choices, according to Citigroup Inc. The euro was near three-week low on signs the currency bloc’s economy is struggling to recover. The New Zealand dollar reached the highest level in almost 1 1/2 years after retail sales jumped.
“A significant amount of the yen’s decline has been in not so much what the BOJ has done in the period but what they’re expected to do in the next year or two,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. Muto is “perceived as not as dovish as some of the candidates so that’s weighing on dollar-yen.”
The yen strengthened 0.6 percent to 92.31 per dollar as of 1:40 p.m. in Tokyo after gaining 0.6 percent yesterday. It added 0.7 percent to 123.30 versus Europe’s currency. The euro was little changed at $1.3358.
BOJ Governor Masaaki Shirakawa, criticized by politicians for not doing enough to end deflation, said last week he’ll step down on March 19, about three weeks before his five-year term is due to end. Abe is close to choosing his nominee for the top BOJ post, and the decision may come in a few days, Reuters reported.
BOJ Opposition
A Japanese opposition party said yesterday it will oppose Muto and Haruhiko Kuroda as candidates to be the next head of the BOJ. Your Party leader Yoshimi Watanabe said both men are unacceptable because they are both former Ministry of Finance bureaucrats.
“Mr. Muto is the more conservative of the two former MOF men,” Osamu Takashima, the Tokyo-based chief currency strategist at Citigroup, wrote in a report dated yesterday.
Kuroda is president of the Asian Development Bank and Muto is a former BOJ deputy governor and chairman of the Daiwa Institute of Research.
G-20 finance ministers and central bankers start a two-day meeting today in Moscow. The group will reaffirm a pledge to “refrain from competitive devaluation” and will commit to monitoring “possible monetary-policy spillover,” according to a draft statement obtained by Bloomberg.
“The yen is being bought as the market remains cautious about statements from the G-20 about currency policies,” said Masato Yanagiya, the head of currency and money trading in New York at Sumitomo Mitsui Banking Corp., a unit of Japan’s second- biggest financial group by market value. “There may be some criticism about the pace of the yen’s depreciation.”
Euro Recession
Russian Finance Minister Anton Siluanov said that his country wanted more “specific” language opposing exchange-rate interference in a communique to be issued after talks among finance chiefs this week.
Reports yesterday signaled that the euro area’s recession deepened more than forecast last quarter. Gross domestic product fell 0.6 percent in the fourth quarter from the previous three months, the European Union’s statistics office said, the worst performance since the first quarter of 2009.
Separate reports showed that GDP in Germany and France, the region’s biggest economies, contracted by more than analysts expected, based on Bloomberg News surveys.
An index of household confidence in the 17-nation currency bloc was probably at minus 23.1 in February from minus 23.9 the previous month, according to a Bloomberg survey of economists. The European Commission is scheduled to release the data on Feb. 20.
In New Zealand, retail sales adjusted for inflation surged 2.1 percent in the three months through December from the third quarter, when they fell a revised 0.2 percent, the statistics office in Wellington said today. The gain was the most since the fourth quarter of 2006 and exceeded the 1.4 percent median estimate in a Bloomberg survey of economists.
The so-called kiwi touched 85.34 U.S. cents, the strongest since Sept. 2, 2011, before trading little at 85.13, up 0.1 percent.
To contact the reporter on this story: Kevin Buckland in Tokyo at kbuckland1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
