BLBG: Yen Falls Versus Dollar as Japan’s Current-Account Gap Balloons
The yen declined against the dollar and the euro after the nation posted its first current-account deficit in 13 years.
The Japanese currency also weakened versus the Swiss franc after the Finance Ministry in Tokyo reported a deficit that was more than 11 times larger than economists forecast. The euro traded near a one-week high against the dollar amid speculation the European Central Bank will slow the pace of interest-rate cuts. The Swiss franc fell against the U.S. currency after a government report showed the jobless rate rose in February as financial losses prompted banks to reduce costs.
“The poor Japanese trade-deficit data are giving further fuel to the idea that Japan, or the yen, is no longer the safe haven as the country’s external position deteriorates,” said Adam Cole, the London-based head of global currency strategy at the Royal Bank of Canada.
The yen weakened to 98.52 per dollar as of 8:55 a.m. in London, from 98.25 last week in New York. The currency depreciated to 124.50 per euro from 124.34 yen. The euro traded at $1.2638 from $1.2653.
Japan, the world’s second-biggest economy, recorded a deficit of 172.8 billion yen ($1.76 billion) in January, the Finance Ministry in Tokyo said. The median estimate in a Bloomberg survey of economists was for a 15.3 billion-yen shortfall.
“There is lingering concern about the trend of exports due to the continued global recession,” said Akio Yoshino, chief economist at Societe Generale Asset Management (Japan) Inc. in Tokyo. “Declines in exports mean less need for Japanese companies to repatriate sales generated outside Japan.”
The global economy is likely to shrink for the first time since World War II and trade will decline by the most in 80 years, the World Bank said yesterday. The assessment is more pessimistic than the International Monetary Fund’s report in January, which predicted 0.5 percent global growth this year.
Japan’s export-oriented economy shrank an annualized 12.7 percent last quarter, the government said Feb. 16, the biggest contraction since the 1974 oil crisis.
