TN:Yen rises as market awaits currency signals from G20
TOKYO, Feb 15 — The yen firmed against the euro and dollar in Asian trading today as markets braced for more conflicting comments on currencies as officials from the Group of 20 nations gathered in Moscow.
The yen was also underpinned by expectations that Japanese Prime Minister Shinzo Abe is close to selecting Toshiro Muto as his nominee for Bank of Japan governor. A decision could come in the next few days, sources close to the process told Reuters.
While any of Abe’s choices is likely to share his views that the central bank should pursue aggressive stimulus measures to end nearly two decades of deflation, Muto is seen as less radical than some of the other likely contenders.
Muto, who served as deputy BOJ governor from 2003 to 2008, has downplayed the idea advocated by some lawmakers that the central bank should buy foreign bonds to keep the yen in check.
“There might be some differences in their willingness to take such steps as foreign bond buying, but all of the candidates are seen as continuing easy monetary policy,” said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
The euro slid about 0.6 per cent to 123.49 yen, off a two-week low of 123.195 earlier in the session. It hit a 34-month high of 127.71 a week earlier.
The dollar shed 0.5 per cent to 92.46 yen, dropping as far as a one-week low of 92.25 yen after taking out weak support and stop-loss orders at 92.50 yen. Stronger support seen at 92.00 yen. It moved away from a 33-month high around 94.47 set on Monday.
While some market participants appeared eager to use Muto’s likely nomination as a reason to cover their yen-short positions ahead of this weekend’s conclusion of the G20 meeting, investors remained wary about the yen’s upside with the BOJ under intense political pressure to reflate the economy.
Japan’s expansive policies that have driven down the value of the yen have been in sharp focus of the G20 finance officials.
Russia’s finance “sherpa”, Deputy Finance Minister Sergei Storchak, said the drafting discussion was proving “difficult”, but the final text would not single out Japan for criticism.
Storchak told reporters that there was no competitive devaluation, but only “market reaction to exclusively internal decision making.”
“We get a lot of bluster heading into these G20 meetings, and the end result always seems to that there’s no unified view here. There’s going to disagreement, and I doubt there will be a common view to come out on FX,” said Mitul Kotecha, Hong Kong-based head of global currency strategy at Credit Agricole.
“There will be attention back on the weak growth in some areas, particularly like the euro zone,” he said.
Data yesterday showing the euro zone slipped deeper into recession late last year pressured the single currency, and focused investors’ attention back on concerns about Europe’s fundamentals.
Against the greenback, the euro rose about 0.1 per cent to US$1.3388, having hit a three-week low of US$1.3315 yesterday. The euro was still well off a 13-month high of US$1.3711 set early this month.
Immediate support for euro/dollar is seen around US$1.3310, a level representing the 38.2 per cent retracement of its November-February rally.
The pullback in the euro saw the dollar index briefly hit a one-month high of 80.621 yesterday, bringing into focus this year’s peak of 80.868 set on January 4. But the resurgent yen helped pull the index down 0.3 per cent to 80.241. — Reuters
