BLBG:Yen Near 3-Year Low as Treasury Backs Japan Stimulus Plan
The yen rallied from an almost three-year low against the dollar as technical indicators signaled its decline was too rapid before Group of 20 finance chiefs meet this week.
The yen yesterday plunged by the most in more than two weeks after Haruhiko Kuroda, a potential contender for BOJ governor, said additional monetary stimulus could be justified for 2013. The euro weakened ahead gross domestic product data for the currency bloc. South Korea’s won fluctuated after North Korea said it conducted a nuclear test.
“There’s speculation that there will be some statements from the G-20 criticizing the rapid pace of yen’s depreciation,” said Masashi Murata, a currency strategist in Tokyo at Brown Brothers Harriman & Co. “The dollar-yen rate is starting to look overbought. It’s no surprise the yen is being bought back after a sharp selloff.”
Japan’s currency rose 0.3 percent to 94.06 per dollar at 2:47 p.m. in Tokyo from yesterday, when it slid as much as 1.8 percent to 94.46, the weakest since May 2010. It gained 0.4 percent to 125.92 per euro from yesterday, when it lost 2 percent. The 17-nation euro slipped 0.2 percent to $1.3387 from yesterday, when it touched $1.3325, the lowest since Jan. 24.
The Japanese currency’s 14-day relative strength index against the dollar was at 27 yesterday, below the 30 level that some traders see as a signal an asset has fallen too rapidly and may be due to reverse course. Against the euro, it was 33.
‘Competitive Devaluation’
U.S. Treasury Undersecretary Lael Brainard said in Washington yesterday she supports efforts in Japan to end deflation and “reinvigorate growth. It will be important that structural reforms accompany macro economic policies to achieve these goals.”
She also said that G-20 nations need to “refrain from competitive devaluation.” G-20 finance chiefs and central bankers are due to meet in Moscow from Feb. 15-16.
Group-of-Seven nations are considering releasing a statement on exchange rates this week to calm concern that the world is on the brink of a currency war, officials from the countries said. The group is looking to release it before the G-20 meeting.
Finance Minister Taro Aso said in Tokyo today Japan will tell G-20 officials it will maintain efforts to beat deflation.
Economists in a Bloomberg News survey estimate euro-area GDP fell 0.4 percent in the fourth quarter from the previous three-month period, when it declined 0.1 percent. The European Union’s statistics office will release the figures on Feb. 14.
“The euro-area GDP will be a focus,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc in New York. “If there are some negative surprises, that will weigh on the euro.”
North Korea detonated a “small, light” atomic bomb with high explosive capability, the official Korean Central News Agency said in a statement today.
The won rose 0.1 percent from yesterday to 1,091.20 per dollar after earlier trading as weak as 1,098.06.
To contact the reporter on this story: Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
