BLBG; Yen Falls Versus Higher-Yielding Currencies as Asia Stocks Rise
The yen weakened against higher- yielding currencies as an advance in Asian stocks and optimism the global recession is easing damped demand for safer assets.
The yen fell against 14 of the 16 most-traded currencies before a U.S. government report that may show housing starts climbed from near a record low, boosting the appetite for riskier investments. South Korea’s won approached a seven-month high as the gain in shares spurred demand for emerging-market assets. The dollar fell to a fourth-month low against the pound as demand for the relative safety of the U.S. currency eased.
“Equities are rising and the worldwide recession may have bottomed out,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “This augurs well for risk-taking appetite and is negative for the yen and the dollar.”
The yen fell to 57.52 per New Zealand dollar as of 6:11 a.m. in London from 57.28 in New York yesterday. It weakened to 12.9057 Korean won from 13.0768. The pound traded at $1.5338 from $1.5348 after reaching $1.5354, the highest since Jan. 8.
Japan’s currency bought 130.66 per euro from 130.61 yesterday. It was at 96.32 per dollar from 96.30 yesterday when it touched 94.55, the strongest since March 20. The euro was at $1.3566 from $1.3562.
Asian Currencies
Asian currencies advanced against the yen and the dollar as optimism the worst of the global recession is over encouraged investors to buy securities in the region. The MSCI Asia-Pacific Index of regional shares climbed 2.3 percent after the Standard & Poor’s 500 Index rose 3 percent yesterday.
The won extended gains in the past month to 6.9 percent against the dollar, the best performance among Asia’s 10 most- traded currencies, as overseas investors bought more local shares than they sold for a third day. The won rose 1.3 percent to 1,242.70, according to data compiled by Bloomberg.
“The won is getting an early boost from an overnight rally in U.S. shares and as foreign investors continue buying local stocks,” said Jo Hyun Suk, a currency dealer at Korea Exchange Bank in Seoul.
The Taiwan dollar advanced to NT$32.89 per dollar from NT$32.994 yesterday, and Thailand’s baht strengthened to 34.40 from 34.56.
The Australian dollar approached a one-week high against the U.S. currency after the nation’s central bank Governor Glenn Stevens said the economy is in good shape to benefit from a global recovery as interest-rate cuts drive domestic demand and a pickup in China stokes exports.
‘Good Position’
Australia “should be in a relatively good position and well placed to take part in a renewed international expansion,” Stevens said in Sydney.
The Australian dollar bought 76.59 U.S. cents from 76.58 cents yesterday, after earlier rising to 76.88 cents, the strongest since May 13.
U.S. housing starts increased in April to an annual rate of 520,000 from 510,000 the previous month, according to the median forecast of economists surveyed by Bloomberg. The Commerce Department will release the report at 8:30 a.m. in Washington.
Demand for the euro was bolstered on speculation a German report today will show investor confidence increased.
The ZEW Center for European Economic Research will say its index of investor and analyst expectations rose to 20 from 13 in April, according to the median forecast in a separate Bloomberg survey. ZEW releases the report, which aims to predict economic developments six months ahead, at 11 a.m. in Mannheim.
Risk Sentiment
“There’s a possibility that Germany’s ZEW survey may surprise on the upside,” said Masafumi Yamamoto, head of foreign-exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader. “This may lead to buying of the euro against the yen amid renewed risk sentiment.”
Losses in the yen may be tempered on speculation overseas investors will buy Japanese government bonds after Moody’s Investors Service yesterday brought Japan’s local and foreign- currency debt ratings to the same level, Aa2.
Moody’s cut the foreign-currency debt rating from Aaa and raised the local-currency assessment from Aa3, saying it can no longer assume that Japan would be more likely to repay debt borrowed in currencies other than the yen. The outlook remains stable, Moody’s said in a statement.
“This should be net positive for the yen as local-currency JGBs are considered the benchmark in global debt markets,” Ashley Davies, a currency strategist in Singapore at UBS AG, wrote in a research note today.
