BLBG:Yen Falls to Three-Month Low Versus Euro on Syria, BOJ
The yen weakened to a three-month low against the euro amid speculation a Russian bid to get Syria to surrender its chemical weapons will avert a U.S. attack, damping demand for haven assets.
Japan’s currency declined versus all except one of its 16 major counterparts as minutes of the Bank of Japan’s August meeting released today showed policy makers agreed monetary easing was taking effect. Australia’s dollar advanced to the strongest in six weeks as Chinese reports added to signs of recovery in the South Pacific nation’s largest trading partner. Norway’s krone jumped after inflation accelerated.
“The yen is weakening because there is plenty of risk appetite,” said Peter Frank, global head of currency strategy at Banco Bilbao Vizcaya Argentaria SA (BBVA) in London. “Everything is going right for the government” in Japan, he said.
The yen dropped 0.6 percent to 132.83 per euro at 7:38 a.m. New York time after sliding to 132.93, the weakest since May 22. Japan’s currency fell 0.7 percent to 100.31 per dollar after depreciating to 100.37, the least since July 25. The euro was little changed at $1.3241.
Currency volatility as measured by JPMorgan Chase & Co.’s G-7 Volatility Index declined as much as 0.05 percentage point to 9.09 percent, the lowest since Aug. 12. The Stoxx Europe 600 Index of shares gained 1.3 percent and the MSCI Asia Pacific Index advanced 1.2 percent.
Russia Proposal
Russia seized on a comment by U.S. Secretary of State John Kerry to urge that Syria turn over its arsenal of chemical weapons to international control.
“If the establishment of international control of chemical weapons in the country will help avoid military strikes, we will immediately start working with Damascus,” Russian Foreign Minister Sergei Lavrov said after meeting with his Syrian counterpart in Moscow yesterday. Syria’s government said it welcomed the idea.
The U.S. is “going to take a hard look” at the Russian proposal, though Assad’s track record “doesn’t give us a lot of confidence,” said Tony Blinken, President Barack Obama’s deputy national security adviser. Obama will make a televised address today to make the case that U.S. security is at stake if the Syrian regime’s alleged use of chemical weapons against civilians goes unanswered.
“An easing over Syria will help dollar-yen,” said Neil Jones, head of European hedge-fund sales at Mizuho Bank Ltd. in London. “Global confidence will increase causing investors to borrow yen and invest in higher-yielding assets.”
BOJ Minutes
The yen also weakened as minutes of the BOJ’s Aug. 7-8 meeting showed policy board members said bond purchases were putting downward pressure on yields and consumer-price expectations have turned favorable.
The yen has declined 2.1 percent in the past week, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar dropped 1.3 percent and the euro fell 0.6 percent.
The Aussie strengthened for a third day against its U.S. counterpart after an index of business confidence improved to the highest since May 2011 as the prospect of a change in government lifted sentiment.
The confidence index for August jumped to 6 from minus 3, according to a National Australia Bank Ltd. survey released today. Factory production in China increased 10.4 percent last month from a year earlier, compared with a 9.7 percent gain in July, the National Bureau of Statistics said in Beijing.
‘Reacting Positively’
“The Aussie dollar is reacting positively to data out of China,” said Takuya Kawabata, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “Expectations that China’s economic recovery is underway are building.”
Australia’s dollar rose 0.6 percent to 92.85 cents after appreciating to 92.90, the highest since July 26.
The Philippine peso climbed the most in more than three years as a report showed exports unexpectedly rose in July. The peso strengthened 1 percent to 43.823 per dollar, the steepest advance since June 2010, Tullett Prebon Plc data show.
Taiwan’s dollar rose to the strongest level since June after exports increased for a fourth month. The currency gained 0.2 percent to 29.76 per dollar.
Norway’s krone climbed 1.1 percent to 7.87788 per euro after a report showed inflation accelerated to 3.2 percent in August, compared with a median estimate of 3 percent in a Bloomberg survey of economists.
To contact the reporters on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net; David Goodman in London at dgoodman28@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
