NS:WORLD FOREX: Yen Stays Strong Despite Japan Leader Shift
--Yen stays strong even as Yoshihiko Noda set to become Japan's next prime minister
--Noda's yen-selling operations as finance minister have had limited effect
--Investors bet there won't be any major yen-negative surprises
--Attention on U.S. economic indicators this week
By Andrew Monahan
Of DOW JONES NEWSWIRES
TOKYO -(Dow Jones)- The yen didn't flinch in Asia Monday even as Japan's intervention-experienced Finance Minister Yoshihiko Noda emerged victorious in a ruling party leadership contest, a win that virtually guarantees he will become the country's next prime minister.
Dealers said the yen may rise further this week as concerns over the U.S. economy keep the save-haven currency in demand. Data from the Chicago Mercantile Exchange showed hedge funds and other non-commercial investors essentially maintained their bets on the yen in the week to Aug. 23, with yen longs up 12% since Japan'sAug. 4 intervention.
Dealers said Noda's election Monday as the next head of the Democratic Party Of Japan, which essentially guarantees he will replace outgoing Prime Minister Naoto Kan as the nation's leader, should not hurt the yen because investors have seen his response so far and how the currency has continued to strengthen despite it.
Even a new package against the yen that Noda unveiled last Wednesday, which includes a $100 billion fund to help spur investments by companies operating abroad and new rules requiring financial firms to disclose foreign exchange holdings, shouldn't have any major near-term impact, analysts said.
"From well before this, the market has tended to look past Japanese politics to U.S. economic indicators and monetary policy trends," said Daisuke Uno, a strategist at Sumitomo Mitsui Banking Corporation.
Noda is unlikely to bring any yen-negative surprises, Uno added.
"He is a known quantity in terms of his views on currency policy and other issues, and has some visibility overseas as he has participated in international meetings."
At 0450 GMT, the dollar was at Y76.72 compared with Y76.74 late Friday in New York.
The greenback may fall as low as Y76.00 this week, said Masafumi Yamamoto, chief foreign exchange strategist at Barclays Capital in Tokyo. Investors will be watching the U.S. ISM manufacturing report for August Thursday and non-farm payrolls for August Friday.
Sharper drops in the greenback are unlikely for now, Yamamoto said, due to the continued possibility of additional monetary easing by the Federal Reserve, after Fed Chairman Ben Bernanke kept that option alive in his speech in Jackson Hole on Friday.
At 0450 GMT, the euro was at Y111.20 from Y111.13, and at $1.4495 from $ 1.4498. The ICE Dollar Index was at 73.731 from 73.713.
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