BLBG: Yen Rises, Ends Four-Day Loss, on Exporter Buying; Pound Gains
By Yasuhiko Seki and Ron Harui
April 5 (Bloomberg) -- The yen rose against the dollar, ending four days of losses, on speculation Japanese exporters bought the currency after it touched a seven-month low.
The yen also gained versus the greenback as technical charts showed its 4.5 percent drop over the past two weeks was excessive. The pound advanced against 14 out of its 16 major counterparts after polls showed the U.K.’s main opposition Conservative Party extended its lead over Gordon Brown’s ruling Labour Party, easing concern political turmoil will derail the recovery. Malaysia’s ringgit led Asian currencies higher.
“There’s talk that exporters are buying the yen, possibly because it’s at attractive levels,” said Takashi Kudo, general manager of market information at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. in Tokyo. “The currency also seems oversold, so this may be another yen-buying factor.”
The yen climbed to 94.51 per dollar as of 10:42 a.m. in London from 94.61 in New York last week, after earlier sliding to 94.79, the weakest since Aug. 24. The currency advanced to 127.32 per euro from 127.75. The pound gained 0.2 percent to $1.5236 and 0.4 percent to 88.44 pence per euro. The dollar rose to $1.3474 per euro from $1.3504.
Financial markets in Europe, Australia, New Zealand and Hong Kong are closed today for the Easter holiday.
The dollar’s 14-day relative strength index against the yen was at 78 on April 2, according to Bloomberg data. A reading above the 70 threshold suggests that gains may be overdone and are poised to reverse course.
Japan’s large manufacturers expect the currency to average 91 per dollar this fiscal year, according to the Bank of Japan’s most recent Tankan survey.
U.K. Survey
The pound gained for the sixth time in seven days after a YouGov Plc poll for the Sunday Times showed support for David Cameron’s Conservatives was 39 percent, while Labour had 29 percent and the Liberal Democrats 20 percent. A survey for the Sunday Express newspaper by Canadian pollsters Angus Reid put the Conservatives at 38 percent, 11 points ahead of Labour.
Newspapers including the Mail on Sunday and the Sunday Times said Brown will name the date of the election on April 6. A vote must be held by June 3.
“The polls seem to suggest that the U.K. political situation is gradually heading toward stabilization,” said Toshiya Yamauchi, senior currency analyst in Tokyo at online currency trading company Ueda Harlow Ltd. “Signs of political stabilization, combined by waning expectations for additional quantitative monetary measures amid the plethora of positive data, will support the currency.”
Ringgit Rises
Malaysia’s ringgit led Asian currencies higher as gains in regional stocks boosted demand for emerging-market assets.
The ringgit also advanced after the government reported exports gained for a third month. Shipments rose 18.4 percent from a year earlier in February after climbing 37 percent the previous month, according to data released April 2 after the close of trading in Malaysia’s financial markets.
“The economic recovery theme is attracting foreigners to ringgit assets,” said Tan Voon Ching, a foreign-exchange trader at OSK Investment Bank Bhd. in Kuala Lumpur. “There’s a lot of confidence in the economic outlook for this year.”
The MSCI Asia Pacific Index climbed 0.3 percent and the Nikkei 225 Stock Average rose 0.5 percent. The ringgit advanced 0.6 percent to 3.2301 per dollar.
Fed Meeting
The dollar traded near the strongest level in more than seven months against the yen on speculation that the Federal Reserve will unwind stimulus measures before other counterparts.
The Federal Reserve Board of Governors will meet today for “review and determination” of the “advance and discount rates” to be set by the Fed, according to its Web site. The Fed raised the discount rate charged to banks for direct loans by a quarter point to 0.75 percent in February.
“Any discount rate hike is likely to be dollar supportive, especially if a full 50 basis-point adjustment is delivered in a single step,” said Gareth Berry, a currency strategist in Singapore at UBS AG. “Any such move is likely to be seen as another step along the road to policy normalization, which will eventually and ultimately lead to a hike in the policy rate.”
To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.
