BLBG:Yen Strengthens From Four-Year Low as Decline Seen Too Rapid
The yen strengthened from its weakest level versus the dollar since May 2009 as traders bet its recent decline has been too rapid.
The Japanese currency advanced versus all of its 16 major peers, halting a three-day 6.4 percent plunge against the greenback, the most since 1988. It strengthened after its 14-day relative strength index against the greenback dropped to 27 yesterday, below the 30 level that some traders see as a sign an asset’s price has fallen too fast. The euro was little changed versus the dollar.
“We haven’t been at 100 for a long-time and there’s a lot of barriers around there,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “The yen will probably go through 100 versus the dollar shortly and then slow down.”
The yen gained 0.4 percent to 98.95 per dollar at 9:04 a.m. London time after earlier declining as much as 0.3 percent to 99.66, the weakest level since May 7, 2009. The Japanese currency gained 0.3 percent to 128.84 per euro. The 17-nation euro was little changed at $1.3016 after advancing to $1.3068, the highest since March 15.
BOJ officials led by Governor Haruhiko Kuroda said last week they will boost monthly bond purchases to 7.5 trillion yen as they set a two-year horizon for their goal of 2 percent inflation. They suspended a cap on some bond holdings and dropped a limit on debt maturities. The central bank’s next policy meeting is on April 26.
The yen has dropped 22 percent in the past six months, the most among 10 developed market currencies measured by Bloomberg Correlation Weighted Indexes, on the Japanese government’s pledge to increase stimulus and end 15 years of deflation. The dollar has climbed 1.4 percent and the euro has risen 2.5 percent.
To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
