ND: Yen Rises As Officiak Says More Weakness Harmful
By Saumya Vaishampayan and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) -- The Japanese yen rose modestly from its five-year lows on Monday as a senior Japanese government official said the currency's "correction" had largely run its course.
Against the Japanese yen, the U.S. dollar (USDJPY) fell to Yen102.55 from Yen102.97 late Friday. The greenback had broken above Yen103 on Friday for the first time since October 2008.
Japan Economic Minister Akira Amari reportedly said on a talk show Sunday that the "correction" of the yen is "largely completed."
Further weakness in the currency would harmful, he said, and the government's job is to determine how to minimize the negative impact.
"What is remarkable about today's price action is that USD/JPY refused to buckle despite Mr. Amari's attempts to talk it down, indicating the strength of the momentum in the pair," Boris Schlossberg, managing director of FX Strategy at BK Asset Management, wrote in a research note Monday morning.
"We doubt that Japanese officials are satisfied with the current exchange rate level and may have simply wanted to slow the rate of ascent of USD/JPY in order for the Japanese economy to absorb the recent price changes," he said.
The yen has dropped about 10% against the dollar since the Bank of Japan in early April announced a two-year campaign to pump about $1.4 trillion into the economy to battle deflation. Since the start of the year, the yen is down about 18% against the dollar.
Yen weakness has helped boost the profit -- and share prices -- of many Japanese exporters, which in turn has pushed the Nikkei Stock Average to its highest level in more than five years. But the weaker yen has also put pressure on Japan's import prices, including those for energy and food.
Analysts at Goldman Sachs on Friday, as part of changes to their currency forecasts, cut their outlook for the yen. They now expect the dollar will buy Yen105 in three months, after the pair moved past Goldman's previous target of Yen102.
late last week was fueled in part by growing anticipation that the U.S. Federal Reserve is moving closer to tapering down its program of buying bonds to aid economic growth. Three regional Fed presidents last week said they foresee the bond buying coming to a close.
Later Monday, Chicago Fed President Charles Evans, a voting member on the Federal Reserve's monetary-policy board, is scheduled to speak in Chicago about monetary policy. Last month, Evans said the Fed could outright end, rather than slow the pace of asset purchases if the economy improves enough.
Earlier in the day Dallas Fed President Richard Fisher said on CNBC he would have voted to start tapering the purchase of mortgage-backed securities at the last Fed meeting. He isn't a voting member of the rate-setting body this year.
Later this week, Fed Chairman Ben Bernanke is slated to address Congress on the central bank's outlook for the economy.
The ICE dollar index (DXY) , which measures the greenback's movement against six other major currencies, was at 84.016, pulling back from 84.225 late Friday after hitting highs not seen since July 2010.
The WSJ Dollar Index , an alternative gauge of the currency's moves against a slightly wider basket, fell to 75.54 from 75.79.
The euro (EURUSD) traded at $1.2855, higher than $1.2823 late Friday.
The British pound (GBPUSD) rose to $1.5212 from $1.5164, and the Australian dollar (AUDUSD) fetched 97.78 U.S. cents, up from 97.29 U.S. cents on Friday.
Goldman Sachs on Friday also cut its forecasts for the Aussie/U.S. dollar pair, saying it sees the Australian currency buying 97 U.S. cents in three months, compared with a previous forecast of $1.05.
Goldman cited deteriorating Australian fundamentals and prospects for lower commodity prices among the reasons for reducing its three-, six- and 12-month views on the pair.
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